What NOBODY talks about is who/what is at risk, as far as average Joe & Jane investor.
There are multi millions of people “investing” in the stock market via 401K, IRA’s etc for their retirement, without having a CLUE what they are doing, just blindly buying stocks via mutual funds or whatever. It’s what they are told to do, so they have money taken out of every single paycheck.
It’s akin to people who bought homes at inflated prices, without having a clue what they were doing. The end result (again) is that some people will get lucky, others will get burned badly.
It isn’t a myth that only a small % of mutual funds beat the indexes, yet fund mangers collect mgmt fees based on the amounts of the funds.
The pitch of the investment industry is that over time, the market returns 11% on average. Please try explaining that simple sentence to someone who had a million dollar portfolio in tech stocks prior to the dot.com bust. I know of accounts that went from $1 mil to $50k pretty fast.
They had been investing for years, hoping to retire around 2002. Plans change.
The innocence of so many people that have a fair amount of money in stocks for retirement is staggering. No idea of p/e, p/s, market cap, enterprise value, growth stocks, value stocks, etc. just assuming that it will grow to an expected amount due to compounding growth (Because we all know that it’s TIME in the market, not timing)
Hopefully for all, people will not want to cash out en masse, but what some people don’t realize is it also isn’t possible. There won’t be enough buyers. (Sounds like homes today) When/if sentiment changes, there goes the market.
Most will ask the same questions as they do about houses, “how come I can’t sell”
Although the major housing losses will be regional, a real downturn in stocks will be national, affecting every single square inch of the country.
Some of the hedge fund money and similar risky investments came from pension funds and average investors Joe & Jane without them even knowing. The total leveraged losses will be covered up by shenanigan accounting for as long as possible.
I read a about a recent pension fund that EXPECTS 8% return year over year. To me it says we NEED 8% or we’re in trouble.
Some of the perps will hope to die before the coverups come to light.
I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.
