Why is it?

[Anonymous]

[quote=HLS]Perhaps it is because the entire 401K premise is a scam? A phony sense of security encouraged by the bandits in govt helped along by lobbyists for Wall Street.

Any idea how much is being raked off the top in management fees regardless of whether the investor ever makes a single penny ?

It’s a serious consideration to put after tax money where you want it rather than being told where to put your pre-tax dollars.

If your 401K money was invested in rental real estate after tax instead in the right areas, the depreciation might rival the lost money.

I’d say that most people really don’t realize how big of a ponzi scheme the stock market is, and have just been brainwashed to believe “diversify & you’re in it for the long run” Wonderful advice from investment “professionals”[/quote]

I have yet to read or have someone explain to me in layman’s terms what our stock markets actually contribute to our economy. I understand the IPO’s for the purpose of growing a company or idea (or to make a few insiders unbeleivabley wealthy), but after that it seems no differint than Vegas, way stacked in the house’s favor, with the dealers telling you to double down on every losing hand.

[MicroGravity]

The 401k was one of the greatest gifts to wall street ever. Millions of people pouring billions of dollars into stocks that they have neither interest nor knowledge. Take a look at what happened to the volume on Wall Street after 401k dollars started pouring in. It was at this point when CEO salaries began to become completely unhinged and decorrelated with company performance and other professionals’ pay.
Once, for example, Coke stock was no longer owned and being watched over by interested and knowledgeable parties, but instead by school teachers and Starbucks workers, the CEO salary was no longer monitored by the majority shareholders. Even if these people realized that they actually owned shares of Coke, what possible impact could they possibly have on the CEO’s salary.
When Peter Lynch or Warren Buffet buy huge shares in companies, they make sure to get a say. But when the majority holders are a few million unrelated people–that likely don’t know they even own that stock–it is not surprise that CEO’s have huge salaries even when the company is making really stupid decisions.
Add in the fact that major retirement funds do their block buys on known dates, and high speed traders skim a little off the top each time the small blip in stock price occurs during that period, and your getting even more screwed.
Happy Friday.

[MicroGravity]

The 401k was one of the greatest gifts to wall street ever. Millions of people pouring billions of dollars into stocks that they have neither interest nor knowledge. Take a look at what happened to the volume on Wall Street after 401k dollars started pouring in. It was at this point when CEO salaries began to become completely unhinged and decorrelated with company performance and other professionals’ pay.
Once, for example, Coke stock was no longer owned and being watched over by interested and knowledgeable parties, but instead by school teachers and Starbucks workers, the CEO salary was no longer monitored by the majority shareholders. Even if these people realized that they actually owned shares of Coke, what possible impact could they possibly have on the CEO’s salary.
When Peter Lynch or Warren Buffet buy huge shares in companies, they make sure to get a say. But when the majority holders are a few million unrelated people–that likely don’t know they even own that stock–it is not surprise that CEO’s have huge salaries even when the company is making really stupid decisions.
Add in the fact that major retirement funds do their block buys on known dates, and high speed traders skim a little off the top each time the small blip in stock price occurs during that period, and your getting even more screwed.
Happy Friday.

[MicroGravity]

The 401k was one of the greatest gifts to wall street ever. Millions of people pouring billions of dollars into stocks that they have neither interest nor knowledge. Take a look at what happened to the volume on Wall Street after 401k dollars started pouring in. It was at this point when CEO salaries began to become completely unhinged and decorrelated with company performance and other professionals’ pay.
Once, for example, Coke stock was no longer owned and being watched over by interested and knowledgeable parties, but instead by school teachers and Starbucks workers, the CEO salary was no longer monitored by the majority shareholders. Even if these people realized that they actually owned shares of Coke, what possible impact could they possibly have on the CEO’s salary.
When Peter Lynch or Warren Buffet buy huge shares in companies, they make sure to get a say. But when the majority holders are a few million unrelated people–that likely don’t know they even own that stock–it is not surprise that CEO’s have huge salaries even when the company is making really stupid decisions.
Add in the fact that major retirement funds do their block buys on known dates, and high speed traders skim a little off the top each time the small blip in stock price occurs during that period, and your getting even more screwed.
Happy Friday.

[MicroGravity]

The 401k was one of the greatest gifts to wall street ever. Millions of people pouring billions of dollars into stocks that they have neither interest nor knowledge. Take a look at what happened to the volume on Wall Street after 401k dollars started pouring in. It was at this point when CEO salaries began to become completely unhinged and decorrelated with company performance and other professionals’ pay.
Once, for example, Coke stock was no longer owned and being watched over by interested and knowledgeable parties, but instead by school teachers and Starbucks workers, the CEO salary was no longer monitored by the majority shareholders. Even if these people realized that they actually owned shares of Coke, what possible impact could they possibly have on the CEO’s salary.
When Peter Lynch or Warren Buffet buy huge shares in companies, they make sure to get a say. But when the majority holders are a few million unrelated people–that likely don’t know they even own that stock–it is not surprise that CEO’s have huge salaries even when the company is making really stupid decisions.
Add in the fact that major retirement funds do their block buys on known dates, and high speed traders skim a little off the top each time the small blip in stock price occurs during that period, and your getting even more screwed.
Happy Friday.

[MicroGravity]

The 401k was one of the greatest gifts to wall street ever. Millions of people pouring billions of dollars into stocks that they have neither interest nor knowledge. Take a look at what happened to the volume on Wall Street after 401k dollars started pouring in. It was at this point when CEO salaries began to become completely unhinged and decorrelated with company performance and other professionals’ pay.
Once, for example, Coke stock was no longer owned and being watched over by interested and knowledgeable parties, but instead by school teachers and Starbucks workers, the CEO salary was no longer monitored by the majority shareholders. Even if these people realized that they actually owned shares of Coke, what possible impact could they possibly have on the CEO’s salary.
When Peter Lynch or Warren Buffet buy huge shares in companies, they make sure to get a say. But when the majority holders are a few million unrelated people–that likely don’t know they even own that stock–it is not surprise that CEO’s have huge salaries even when the company is making really stupid decisions.
Add in the fact that major retirement funds do their block buys on known dates, and high speed traders skim a little off the top each time the small blip in stock price occurs during that period, and your getting even more screwed.
Happy Friday.

[patientrenter]

Great point, MicroGravity. We applauded the idea of diversification. It was a magic potion. More of it was always better. Even today, intelligent people, leaders of our economy, speak of it this way. Yet we are learning it has serious downsides, and probably needs to be reined in.

A drive to diversify leads people to buy shares of companies through mutual funds instead of doing their own stock research and due diligence. As you pointed out, the resulting dilution of accountability of the company’s managers to its owners has led to disastrous consequences for corporate governance of public companies, including excessive CEO pay.

But the same excessive drive to diversify at all costs contributed to the home loan bubble and fiasco. Instead of local banks lending directly to local home buyers, and holding the loans, the loans were re-sold to others who didn’t know much about the collateral or borrowers, after they had been bundled into diversified packages.

All of this diversification has aggravated the agent-principal problem, where the interests of the ultimate investors / lenders are managed by agents whose interests and incentives are not well aligned with the interests of the people whose money is being put on the line.

We need to start balancing the goal of diversification with the goal of accountability of managers to owners.

[patientrenter]

Great point, MicroGravity. We applauded the idea of diversification. It was a magic potion. More of it was always better. Even today, intelligent people, leaders of our economy, speak of it this way. Yet we are learning it has serious downsides, and probably needs to be reined in.

A drive to diversify leads people to buy shares of companies through mutual funds instead of doing their own stock research and due diligence. As you pointed out, the resulting dilution of accountability of the company’s managers to its owners has led to disastrous consequences for corporate governance of public companies, including excessive CEO pay.

But the same excessive drive to diversify at all costs contributed to the home loan bubble and fiasco. Instead of local banks lending directly to local home buyers, and holding the loans, the loans were re-sold to others who didn’t know much about the collateral or borrowers, after they had been bundled into diversified packages.

All of this diversification has aggravated the agent-principal problem, where the interests of the ultimate investors / lenders are managed by agents whose interests and incentives are not well aligned with the interests of the people whose money is being put on the line.

We need to start balancing the goal of diversification with the goal of accountability of managers to owners.

[patientrenter]

Great point, MicroGravity. We applauded the idea of diversification. It was a magic potion. More of it was always better. Even today, intelligent people, leaders of our economy, speak of it this way. Yet we are learning it has serious downsides, and probably needs to be reined in.

A drive to diversify leads people to buy shares of companies through mutual funds instead of doing their own stock research and due diligence. As you pointed out, the resulting dilution of accountability of the company’s managers to its owners has led to disastrous consequences for corporate governance of public companies, including excessive CEO pay.

But the same excessive drive to diversify at all costs contributed to the home loan bubble and fiasco. Instead of local banks lending directly to local home buyers, and holding the loans, the loans were re-sold to others who didn’t know much about the collateral or borrowers, after they had been bundled into diversified packages.

All of this diversification has aggravated the agent-principal problem, where the interests of the ultimate investors / lenders are managed by agents whose interests and incentives are not well aligned with the interests of the people whose money is being put on the line.

We need to start balancing the goal of diversification with the goal of accountability of managers to owners.

[patientrenter]

Great point, MicroGravity. We applauded the idea of diversification. It was a magic potion. More of it was always better. Even today, intelligent people, leaders of our economy, speak of it this way. Yet we are learning it has serious downsides, and probably needs to be reined in.

A drive to diversify leads people to buy shares of companies through mutual funds instead of doing their own stock research and due diligence. As you pointed out, the resulting dilution of accountability of the company’s managers to its owners has led to disastrous consequences for corporate governance of public companies, including excessive CEO pay.

But the same excessive drive to diversify at all costs contributed to the home loan bubble and fiasco. Instead of local banks lending directly to local home buyers, and holding the loans, the loans were re-sold to others who didn’t know much about the collateral or borrowers, after they had been bundled into diversified packages.

All of this diversification has aggravated the agent-principal problem, where the interests of the ultimate investors / lenders are managed by agents whose interests and incentives are not well aligned with the interests of the people whose money is being put on the line.

We need to start balancing the goal of diversification with the goal of accountability of managers to owners.

[patientrenter]

Great point, MicroGravity. We applauded the idea of diversification. It was a magic potion. More of it was always better. Even today, intelligent people, leaders of our economy, speak of it this way. Yet we are learning it has serious downsides, and probably needs to be reined in.

A drive to diversify leads people to buy shares of companies through mutual funds instead of doing their own stock research and due diligence. As you pointed out, the resulting dilution of accountability of the company’s managers to its owners has led to disastrous consequences for corporate governance of public companies, including excessive CEO pay.

But the same excessive drive to diversify at all costs contributed to the home loan bubble and fiasco. Instead of local banks lending directly to local home buyers, and holding the loans, the loans were re-sold to others who didn’t know much about the collateral or borrowers, after they had been bundled into diversified packages.

All of this diversification has aggravated the agent-principal problem, where the interests of the ultimate investors / lenders are managed by agents whose interests and incentives are not well aligned with the interests of the people whose money is being put on the line.

We need to start balancing the goal of diversification with the goal of accountability of managers to owners.

[Raybyrnes]

threadkiller
I am missing why your employer match has anything to do with why you contribute to the 401K. The employer match is gravy . the real benefit is tax deferred growth.

I can understand looking to first fund your roth and then looking to fund the 401K. But what are your going to do once you’ve exhausted your Roth limit.

If you have the tax advantage on the 401K you are going to have a tough time outperforming in a brokerage account.

[Raybyrnes]

threadkiller
I am missing why your employer match has anything to do with why you contribute to the 401K. The employer match is gravy . the real benefit is tax deferred growth.

I can understand looking to first fund your roth and then looking to fund the 401K. But what are your going to do once you’ve exhausted your Roth limit.

If you have the tax advantage on the 401K you are going to have a tough time outperforming in a brokerage account.

[Raybyrnes]

threadkiller
I am missing why your employer match has anything to do with why you contribute to the 401K. The employer match is gravy . the real benefit is tax deferred growth.

I can understand looking to first fund your roth and then looking to fund the 401K. But what are your going to do once you’ve exhausted your Roth limit.

If you have the tax advantage on the 401K you are going to have a tough time outperforming in a brokerage account.

[Raybyrnes]

threadkiller
I am missing why your employer match has anything to do with why you contribute to the 401K. The employer match is gravy . the real benefit is tax deferred growth.

I can understand looking to first fund your roth and then looking to fund the 401K. But what are your going to do once you’ve exhausted your Roth limit.

If you have the tax advantage on the 401K you are going to have a tough time outperforming in a brokerage account.

[Author]

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