Serious SS question

[Michael Tee]

<<You & Tee's (& Js's) inability to deal with the crux of the query, helped make the point as clear as could be. >>

Here is the query:

<<At anytime in modern day U.S. history has the stock market, over a 30year period of time (a conservative number for a retiree, since it's much more likely to be pushing 50+yrs), provided a return less than what one put in??  Or more pertinent, has there been such a period that demonstrated a return LESS than that of SS??>>

sirs, for reasons which both JS and I made perfectly clear, your question as phrased was unanswerable.  You failed to define your terms.  What is "the stock market?"  The NYSE alone lists over 2,000 companies.  NASDAQ lists over 3,000.  There are other stock markets as well, both in the U.S.A. and in Canada and in the rest of the world.  A "stock market" itself pays no return.  Nobody ever got a dividend cheque from the New York Stock Exchange.  An investor buys shares in one or more companies listed on an exchange, and if he or she is lucky, the shares will pay a return on investment ("ROI.")  Each company has a different ROI.  No two investors will buy shares in the same companies and hold them for the same period of time.  The ROI for any investor depends entirely on what particular shares he or she bought, and on what he or she paid for them at the time of purchase.

Although I could not answer the question you posed, I did provide some information which I felt had a bearing on what you were trying to prove.  The information that I gave (which was all that I had) indicated to ME that very few people were good stock market investors.  That's MY personal opinion based on MY personal experience.  Anyone else is welcome to provide contradictory experiences and/or opinions, but I gave my own honest experience and my own logical conclusions. 

Your query was very badly worded and as such, impossible to answer.  It is ludicrous to complain as you did that JS, XO and I suffered from an "inability to deal with the crux" of your query.  NOBODY can deal with the "crux" of your query as phrased.  I did the best I could to provide you with information and an opinion based on that information which I felt related to the issue which you had chosen to explore.  The conclusion was not to your liking, but that's OK.  You don't have to accept it.  There are any number of reasons to object to my conclusions:  the data was not representative, there is no hard evidence that any of the "silent" investors had actually LOST money in stocks, the ones who didn't talk might have been the biggest winners, etc.   But you did not present one valid argument against my facts or my theory - - instead, you just chose to whine about nobody being "able" to answer the "crux" of your query.  That is just plain ridiculous.

<<Again, I thank you>>

I have definitely been patient with you up to now,  but this comment is just too stupid to require a response.

[Plane]

To narrow it down a bit.

No,
 ...there is no period of even ten years in which a down market in the New York Stock Exchange has not made up its loss entirely.

The "advradge" stock in the USA has been a good investment compared with most.

Other stock markets milage may vary, and only a few stocks are advradge.

But in general , as a scheme for accumulateing wealth for the purpose of retiremnt Stock markets have a better than equal track record with government schemes.

[Michael Tee]

<<...there is no period of even ten years in which a down market in the New York Stock Exchange has not made up its loss entirely.

<<The "advradge" stock in the USA has been a good investment compared with most.

<<Other stock markets milage may vary, and only a few stocks are advradge.

<<But in general , as a scheme for accumulateing wealth for the purpose of retiremnt Stock markets have a better than equal track record with government schemes.>>

What's the source of that information?

[Plane]

<<...there is no period of even ten years in which a down market in the New York Stock Exchange has not made up its loss entirely.

<<The "advradge" stock in the USA has been a good investment compared with most.

<<Other stock markets milage may vary, and only a few stocks are advradge.

<<But in general , as a scheme for accumulateing wealth for the purpose of retiremnt Stock markets have a better than equal track record with government schemes.>>

What's the source of that information?

Myself,
contradict me.

[Michael Tee]

I won't contradict you.  I'll just say that the allegation remains unproven.

[sirs]

As does yours

[Michael Tee]

The difference being, I admitted from the outset that the only information I had was my own experience.  My own conclusions.  So right now, it's all I have to go on.  I accept my conclusions are tentative.  If someone has stronger evidence of a contrary conclusion I will be happy to accept it.  I only say with respect to plane's opinion, he doesn't even base it on experience, so it's totally unsupported.  At this point in time, the only evidence I have supports my tentative conclusion and plane hasn't been able to shake it because the evidence he has is zero.  He's got an unsupported opinion, I have an opinion supported only by a very limited sampling of people with large unknown quantities unaccounted for.

[sirs]

It's actually quite simple Tee, though I understand why you, Js, and Xo are trying to muddy it up as much as posible.  Where is this laundry list of folks who have left their money in the Stock Market (the U.S.) for 30+ years, and had less at the end of that time, than when they started?? 

Something to validate the continued egregious demagoguging of the notion of allowing the OPTION of some folks to invest a mere FRACTION of their OWN SS $$$ into a system that has yet to be demonstrated by anyone on the left, that leaving it there for similar amount of time that SS is kept, will be some sort of economic catastrophe

In other words, you have nothing, but your preconceived notions of how bad capitalism & the U.S., are supposed to be.

[Plane]

http://www.naaim.org/whyactive.php



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Ok so my estimate of 10 years might be pessimistic.


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Modern portfolio theory holds that the marketplace demands a higher rate of return from higher risk investments. This has proven true for the stock market, which has historically outperformed most other forms of investments, but at the cost of subjecting investors to greater volatility or risk. Risk is defined as the variability of an investment's returns over time.

Between 1929 and 2006, there have been 14 bear markets, periods when the S&P 500 has fallen at least 20%. The average bear market caused stock prices to decline 39%. Omitting the 1929 crash, when values declined 87%, there was still an average loss of 33%. During those 70 years, a new bear market began on the average of every five years, and lasted 17 months. After the bear market bottomed, omitting the 1929 crash, it took an average of 3.5 years just to break even.

Studies of market indices over the past 70 years show that active managers can actually be on the wrong side of the market nearly 40% of the time and still equal a buy-and-hold return. In other words, the manager could miss 20% of a major up move in the market, participate in 20% of the drop and still equal the S&P 500 due to a phenomenon known as the buy-and-hold equalizer. (Why Market Timing Works, Journal of Portfolio Management, Summer 1997)

The equalizer represents the increased leverage an active investment strategy gains by preserving capital during a market drop. The more money an investor has to invest when the market turns up, the greater the performance leverage. Investors can outperform a buy-and-hold strategy even if they don't participate in the strongest times, as long as they escape major market declines.

[Michael Tee]

How would buy-and-hold theory apply to a guy whose stock is de-listed during the 30-year period?  He's left holding a piece of worthless paper in his hands.  It'll never go up or down again.

Also, your theory seems to put aside the 1929 crash and not factor it into any of your conclusions.  The very crash that led to the push for social security is turned into a non-event?  If SS was delivered to guard against events like another 1929 crash, why calculate the risks of alternatives to SS by factoring out the very thing that inspired the need for SS in the first place?  You've basically cut the raw data of your calculations to deliver the result you're looking for.

[_JS]

This is so aggravating.

What do you mean by "Stock Market?"

Are you including bonds, loan swaps, futures, forwards, commodities, currency exchange, etc?

You realize that mutual funds often include bonds which aren't traded on the exchange market, but on the bond market? So do you include mutual funds in this query?

It is complicated because the nature of the discussion is complicated, Sirs.

Where is this laundry list of folks who have left their money in the Stock Market (the U.S.) for 30+ years, and had less at the end of that time, than when they started??

Three points:

1. Ask those people who had profit sharing retirement accounts in Enron or World Com. They have less than they started with.

2. The question is simple, and also useless. You need to add the clarifier "in real terms" at the end of it. Simple inflation dictates that one should have more money now than when they started in 1978. Yet, if it hasn't kept pace with inflation then it is absolutely useless.

3. You missed my point about the goal of Social Security, which is not to enrich Wall Street brokers nor is it to fluctuate with the market.

[Michael Tee]

<<It's actually quite simple Tee, though I understand why you, Js, and Xo are trying to muddy it up as much as posible.  Where is this laundry list of folks who have left their money in the Stock Market (the U.S.) for 30+ years, and had less at the end of that time, than when they started?? >>

If you're looking for a laundry list from me, forget about it.  I already told you I don't have one.  There are such things as privacy laws and unless an investor wants to publicize his own stupidity, you won't hear about it from him.  As I said, if anyone has a different life experience than mine, I'd love to hear about it.  Anyone out there have friends who admit "I left $300,000 in the market for 30 years and when I went to take it out there was only $20,000 left?"  Anyone?  Anyone?

You managed to demonstrate with that one question both your naivete and your lack of imagination.  If one piece of information (the laundry list) is not available, you want to abandon all attempts to solve the problem.  Other more resourceful people than you, will look at the problem and think, what other relevant information IS available, that might shed some light on this?  Granted a laundry list would be ideal, but in the absence of the ideal, is there any information which might shed some light on the problem?  I found some and plane found some.  If plane's information holds up, it's obviously stronger evidence than mine.  I make no apologies for that - - I went with the best data I had, plane had better data.  That's what this club is all about, exchange of information and views. 

However even if plane's theories are correct and any 30-year period shows all representative indexes staying even or rising, you have another HUGE bump in the road to get around:  where is the evidence that all or even a majority of American investors are going to go with the market average?  Common sense and experience say that some will meet the average, some will exceed it by big or small margins and some will undershoot it by big or small margins.

<<Something to validate the continued egregious demagoguging of the notion of allowing the OPTION of some folks to invest a mere FRACTION of their OWN SS $$$  . . . >>

And what would that "mere fraction" be?   

<< . . . into a system that has yet to be demonstrated by anyone on the left, that leaving it there for similar amount of time that SS is kept, will be some sort of economic catastrophe>>

Well it's sure as hell a catastrophe for someone who can't pay his bills after retirement because the stock market beat him.  Although of course that won't be YOUR problem and it won't be Bush's either.

<<In other words, you have nothing, but your preconceived notions of how bad capitalism & the U.S., are supposed to be.>>

No, what I have is my knowledge based on personal experience that the number of investors who do well in the stock market seems to be much lower than the number who did well in real estate, and that whereas many uneducated and unsophisticated people seem to have done well in real estate, only a small number of exceptionally street-smart and savvy people seem to have done well in the stock markets.

Something else that just occurred to me:  a majority of good stock market investment decisions can be wiped out by one bad one.  True, if plane's theory holds true, thirty years will wipe out the effects of the bad one (if you don't factor in possible disasters like the 1929 crash, the very reason for SS in the first place.)  But a guy who's cashing in at retirement doesn't HAVE thirty years.  He needs the money when he retires, not thirty years down the road.

Your plan is a big fucking rip-off in the making and it should be obvious to every thinking person.  Even if it's only a "fraction" of retirement savings.  If Wall Street can get its hands on 30% of the nation's retirement savings instead of 100%, so that's OK, they'll just rip off the 30% if they can.  It's a bonanza for them any way you slice it.  Bush, Cheney and the people who back them don't give a shit about anyone.  Not about Amerikkkan soldiers, whose lives they throw away for oil (or "Iraqi democracy" as they like to call it.)  Not about Hurricane Katrina victims.  Bush is a guy who openly laughed at and mocked the pleas of Karla Faye Tucker for her life.   Can you imagine it?  He's making fun of a condemned woman pleading for her life?  But these guys also have a soft spot in their hearts, and it's reserved for YOU, the American worker.  They want you to have a better retirement.  Isn't that touching?  And you can have that better retirement, just by investing your SS money, not with the big, bad U.S. government, but with their friends on Wall Street, those wonderful, good people who have so vigilantly guarded their investors' money lo these many years, sparing no effort to see that it would be protected against frauds, and con artists.  Oh and don't worry, you don't have to give them ALL of your retirement money, 30% will be just dandy.  See how we look after you?  See how we care?

The level of stupidity required for this kind of thinking is just plain mind-boggling.  But I can't say that I'm surprised in any way.  Wish that I could.  I say, if the Amerikkkan sheeple are so fucking stupid as to go along with this obvious rip-off from an administration which lies to them on a routine basis, then go ahead and just do it.  You (the sheeple, sirs, not you personally) will deserve anything and everything that happens to you as a result.

[sirs]

This is so aggravating.  What do you mean by "Stock Market?"

Simple, for those not trying to make this topic aggravating.......any examples of those who have invested within our Stock Market for 30+years, and came out with less than they put in.  They could have applied it in mutual funds, commodities, what-ever.  The point being not what specific derivatives of the Market, but the time allotted. 

And it's not any more complicated than that, especially to prove the point being made.....that the left has zip examples apparently of anyone keeping an investment in some selected vestages of the Stock Market, and having less at the end, than when they started.  Sure there are those who put "all of their eggs" in 1 basket, and then that 1 investment crashes where they lose everything.  That's NEVER been discussed as one of the plans to reform SS, and not even worthy of discussion.  This query is consistent with the plans that were being presented, regarding the option younger workers would have in being allowed to invest a mere FRACTION of their payroll tax/SS, into selected derivatives of the Market. 

 

[_JS]

Roger Boyce, 71 and Dale Roberts, 54 - http://www.usatoday.com/money/industries/energy/2006-01-25-enron-employees-usat_x.htm

Dan Gannon, 60 - http://www.kvue.com/news/state/stories/032107kvueenronpowerball-eh.dc12b6.html
(This one has a twist - he won $182 million in the Powerball lottery )

Lisa Brown's retirement fund fell from $45,000 to $210 from Worldcom's debacle. That was a 99.5% drop in value. You are suggesting that her $210 is going to recover its value in real terms before she retires? I'm not talking about putting new money into it. I'm talking about that original $210. It is going to recover the value it had ($45,000) plus the value of inflation, plus some positive value in returns, in the span of 30 - t (the years it took her to build it to $45,000) years?

I've provided the names and the data, now you answer my question Sirs.

[Plane]

It isn't wise to invest all of the retirement in a single company , or even a single type of company.

Someone who buys an index fund risks a lot less than someone who buys a single stock, the best choice is several index funds , and then the risk is spread as widely as it can be over the economy and only a general failure of the economy would cause true loss.

That makes a good base and safe nest egg , investing also in something more speculative is a good idea for people who can stand the risk of loss and inevitability of flux.

Investment in government lone is the opposite of diversification , it bears safety only in the surety of the government keeping its promises , why is that sure? Because reneging on those promises will be politically unpopular? These promises were made to be popular not to be possible to keep. The mathematical inevitability of Social security's failure can be demonstrated ,arithmetic doesn't care whether it is popular or not.

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On the point of the 29 crash , being the worst event of its kind during the century it is fair to compute advrages while leaving the spike out , because that gives one a better idea of normal conditions. However if one computes the figures including the 29 crash surprisingly little changes . Someone who bought a share of every stock on the NYSE at the high shortly before the crash and simply held it all would have made all of his loss back in less than ten years.
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How would buy-and-hold theory apply to a guy whose stock is de-listed during the 30-year period?  He's left holding a piece of worthless paper in his hands.  It'll never go up or down again.

Only a real clairvoyant should put all of his eggs in one basket . Some companies are going to fail even in very good years. Someone must suffer loss because they bought buggy whip manufacturers , this just has to happen. Forcing people to participate in a Ponzi scheme run by the government is no solution to the "problem" because t isn't a problem.

 What should happen is that Mutual funds should become the most popular means of investment and , voila' they are. More is invested in Mutual funds than any other sort o investment availible to the general public. It is a truism to say that more is invested in mutual funds than in Social Security , nothing is invested in Social Security.