[quote=ucodegen][quote=CA renter]Without the government either acting directly or indirectly, as they did after the Northridge earthquake, there would be no middle class, and (IMHO) we would not have experienced the social and economic successes that we’ve seen in this country’s history.[/quote]Huh? does not follow. Statement is not supported by facts. Remember that the government is allowing Hedge Fund managers to pay a much lower tax rate than people who work for money. Hedge Fund managers get to pay at capital gains rates and not at income rates even though they are paid based upon work and not based upon amount that they have personally invested (amount of capital at risk).
[quote=CA renter]We need to go back to 100% in-house management with NO outside advisors. Anyone found guilty of fraud or corruption, either inside or outside of the institution, should personally lose EVERYTHING and face a very stiff prison sentence.[/quote]How would you know that in-house advisers were being as responsible as they could? How do you prove it? It sounds good, but having dealt with some ‘insider’ behavior, prosecution and proving it is harder to do than say. There are many funds that are well managed with low load fees. Why duplicate the effort. I would want to allow people to select the investments themselves as a potential option. The part I worry about in ‘assigned’ handlers of 401Ks, is potential insider dealing between the employer and paid servicer, as well as an employer who really doesn’t push the 401K servicer to put reasonable funds (and not their junk funds) into the 401K selection.
[quote=livinincali]Why don’t we just eliminate the middle man completely and just give employees a defined contribution that they are free to invest how they wish. We immediately eliminate all the problems associated with a defined benefit plan.[/quote] What I was trying to say in many more words…
Sometimes to get it done right.. you have to do it yourself.[/quote]
DIY investing might work well for Piggs and other nerds who spend an inordinate amount of time analyzing economic and various market trends. This is a small group of fortunate people who are inclined to have above-average IQs, financial acumen, and investment returns. Even here, we know that many of us will under-perform at one point or another.
Society and the economy work best when everyone does what he or she is most qualified for — the thing for which he/she has a particular talent or ability. We cannot, and should not, expect everyone to be a trader/speculator/investor with above-average gains (statistically impossible, anyway, as you know). I want my doctor to know medicine better than anyone else, but that will preclude him/her from dedicating sufficient time to his/her investment portfolio. OTOH, a professional financial analyst/investor — one who spends all of his/her time studying markets and financial trends — will most likely be able to grow and protect that portfolio better than the best doctor.
Half of the population has an IQ under 100. I do not think that DIY investing is going to work out for the long-term for most people, whether or not they are blessed enough to be born with a greater intellect. Centrally-managed retirement funds do work when they are managed conservatively and transparently. I’ll be the first to admit that this is not the case at many public pension funds, but that can be changed if there is enough political will.
Transparency and accountability are imperative in all markets, public and private, IMHO. If we make the system transparent enough, and if we hold people accountable, it can absolutely work.
