Dow 30,000

[SEIOWA CLONE]

Did you not comprehend my question? I asked for an example of a 14.5 year period where a major index lost money. It looks like the Dow topped out in 07 at about 14,000, crashed, and recovered back to 14,000 in 2013. We are currently 12 year out from the crash and if you had put money in at the high right before the crash, you would have almost doubled it by today.

But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.
If defined benefits are such a loser like some claim, I would think every factory in America would be endorsing them instead of pulling away. Factories have learned that most young workers are not using their 401K program so the employer does not have to match much at all. But in a defined benefits program they have to put that money into the program. They have no choice. 401K help the employer in terms of costs, a lot more than a defined benefits program.
https://seekingalpha.com/article/4145460-much-401-k-lose-next-market-crash

 

[VeloClone]

The reason is simple, for the past 40 years we have been working under the false economic theory of trickle down economics. Factories sell less, because wages for the average working have not been increasing. Therefore they are forced to cut back on their purchases.
It does very little for the economy as a whole to give most of the profits to those at the top end of the spectrum. They spend a smaller share of those profits than a working man does, buying goods and services.
You want to see factories start selling more goods and increase production, you do it by raising the minimum wage, giving tax cuts to the people in the middle and bottom, not at the top.

The answer is never as simple as most people with an agenda would like to make it seem. Which trickle down economic policies in the last 40 years caused the two decade plateau in productivity starting in 1966?

As far as tax cuts go, I don't believe we should be talking about tax cuts for anyone until we can get our federal accounts in order. The level of deficit spending that is the mode in Washington is not sustainable.

 

[SpokaneCY]

The data shows that unemployment is low because many are forced to take a second job to make ends meet. What should be happening with record low unemployment is salaries starting to raise, but so far that has not been happening for the average worker. Employers so far have not done much to change that.

https://www.epi.org/nominal-wage-tracker/

I won't debate that but I don't believe that to be true based on generic reading I've done through the years. Sounds like you have a more thorough link arsenal so I'll bow out and stick to the glib funny responses I'm better at...

 

[Gunnerclone]

I can’t wait to get that lump sum from my wife’s and my own defined benefit plans. I’m flying to Florida with a big old bag of cash and buying a beach house, a classic Jeep or Bronco, the best indoor grow setup I can get my hands on and getting the receipts on the same day.

 

[DurangoCy]

Did you not comprehend my question? I asked for an example of a 14.5 year period where a major index lost money. It looks like the Dow topped out in 07 at about 14,000, crashed, and recovered back to 14,000 in 2013. We are currently 12 year out from the crash and if you had put money in at the high right before the crash, you would have almost doubled it by today.

Don't let your facts get in the way of his pity party.

 

[aeroclone]

You are also forgetting the 10% penalty for taking out the money if you are younger than 59.5 years of age. You can forgo the penalty if you leave work at age 55, but only take money out that you put into the 401K from that place of employment. So you 10% early withdraw and pay taxes on the money at the current rate instead of deferring them down the road.
The wealthy guy can just sell his stock, pay no penalty and 15% capital gains if you owned the stock for more than 1 year.
https://www.thebalance.com/what-is-the-rule-of-55-2894280

Umm, the 10% penalty for early withdrawl before retirement age was literally the second sentence in my post.

And if you want to invest post tax dollars outside a retirement account you can also leverage the lower cap gains rate at 15%. This isn't some fancy tax dodge open only to the wealthy.

In general though I just don't get the point you are making here. A rising stock market benefits anyone who owns stocks. Whether you hold most of those in a tax advantaged account or not is really irrelevant.

 

[Sigmapolis]

The reason is simple, for the past 40 years we have been working under the false economic theory of trickle down economics. Factories sell less, because wages for the average working have not been increasing. Therefore they are forced to cut back on their purchases.
It does very little for the economy as a whole to give most of the profits to those at the top end of the spectrum. They spend a smaller share of those profits than a working man does, buying goods and services.
You want to see factories start selling more goods and increase production, you do it by raising the minimum wage, giving tax cuts to the people in the middle and bottom, not at the top.

I think you greatly overrate the influence of fiscal policy to influence the economy. Sure, it matters, but it is not nearly as influential as other structural forces.

To go through a few quickly...

-- Technological progress has slowed down. The First Industrial Revolution, which centered on the mechanization of agriculture and industry with water power and steam power, led to some incredible productivity gains. The Second Industrial Revolution, centering on electrification and fossil fuels, technological improvements to production, and revolutions in consumer goods and the automobile, was nearly as good. The Third Industrial Revolution, which centers on computers and the Internet, has greatly changed how we store and process information and communicate with each other, but it has had a comparatively small impact on industrial productivity and how we collect, store, and process energy as an economy. To borrow a Krugman quote, "We were promised jet packs and flying cars and ended up with 140 character limits."

Going from horses to watermills to steam engines to coal power and electrification had more of an impact on the economy of making everything digital and email.

How any why technological progress happens is a big question, but I do not think that Reagan era tax polices can explain a slowdown in productivity growth in the 1950s and 1960s compared to the extremely rapid growth in the 1800s and early 1900s.

-- The world economy is now global. American producers and workers are competing with the rest of the world on cost and quality. That has been great for humanity with billions of people escaping extreme poverty, offered lower prices and more selection on countless consumer goods for American households, and been good for American involved in the sectors that can compete in that larger pool. Being hitched to some obsolete industry in a small Rust Belt town has not been as much fun, however, and we can see that in all sorts of dying Iowa towns.

I could go on, but most of what happens in our economy is structural and related to technology and demographics, nationally and globally, not because of politics.

 

[SEIOWA CLONE]

I think you greatly overrate the influence of fiscal policy to influence the economy. Sure, it matters, but it is not nearly as influential as other structural forces.

To go through a few quickly...

-- Technological progress has slowed down. The First Industrial Revolution, which centered on the mechanization of agriculture and industry with water power and steam power, led to some incredible productivity gains. The Second Industrial Revolution, centering on electrification and fossil fuels, technological improvements to production, and revolutions in consumer goods and the automobile, was nearly as good. The Third Industrial Revolution, which centers on computers and the Internet, has greatly changed how we store and process information and communicate with each other, but it has had a comparatively small impact on industrial productivity and how we collect, store, and process energy as an economy. To borrow a Krugman quote, "We were promised jet packs and flying cars and ended up with 140 character limits."

Going from horses to watermills to steam engines to coal power and electrification had more of an impact on the economy of making everything digital and email.

How any why technological progress happens is a big question, but I do not think that Reagan era tax polices can explain a slowdown in productivity growth in the 1950s and 1960s compared to the extremely rapid growth in the 1800s and early 1900s.

-- The world economy is now global. American producers and workers are competing with the rest of the world on cost and quality. That has been great for humanity with billions of people escaping extreme poverty, offered lower prices and more selection on countless consumer goods for American households, and been good for American involved in the sectors that can compete in that larger pool. Being hitched to some obsolete industry in a small Rust Belt town has not been as much fun, however, and we can see that in all sorts of dying Iowa towns.

I could go on, but most of what happens in our economy is structural and related to technology and demographics, nationally and globally, not because of politics.

Without a doubt the US economy is tied to globalization and technology, but when you leave out programs like NAFTA that allow US corporation to shift production to Mexico, receive tax breaks like they are building a plant in the US and pay their workers less, we have a problem.

What has happened we have switched from companies being loyal to their workers, to ones now tied to increasing the price of the stock. We are courting the shareholder now, not the people that are doing the actual labor in making the product. When 84% of the stock is owned by the top 10% of the population, we have a system that is skewed to those at the top.

Countries like Germany, have lower tax rates for companies building things in Germany, and higher tax rates for those the build it outside the country. They are trying to protect their workers, here in the US, the government could care less about the worker only those at the top and the stockholders.

So for many of us the stock market has little to no effect on our day to day lives because its just on paper. That has always been my point in this discussion, unless I can walk in and sell my 401K and receive the same amount as a person that can sell his stock, it really does not help me a whole lot. The two are not equal in any form or way.

I tend to think that 401K are great for the savvy investor that has the time to read up and do his homework, but the vast majority of people are not educated in it or do not want to learn. They throw their money into the account that someone has told them is a great investment and hope.

 

[Gunnerclone]

Without a doubt the US economy is tied to globalization and technology, but when you leave out programs like NAFTA that allow US corporation to shift production to Mexico, receive tax breaks like they are building a plant in the US and pay their workers less, we have a problem.

What has happened we have switched from companies being loyal to their workers, to ones now tied to increasing the price of the stock. We are courting the shareholder now, not the people that are doing the actual labor in making the product. When 84% of the stock is owned by the top 10% of the population, we have a system that is skewed to those at the top.

Countries like Germany, have lower tax rates for companies building things in Germany, and higher tax rates for those the build it outside the country. They are trying to protect their workers, here in the US, the government could care less about the worker only those at the top and the stockholders.

So for many of us the stock market has little to no effect on our day to day lives because its just on paper. That has always been my point in this discussion, unless I can walk in and sell my 401K and receive the same amount as a person that can sell his stock, it really does not help me a whole lot. The two are not equal in any form or way.

But you can have both and get the benefits of both so I don’t know what the problem is. You’re free to do any and everything you would like. So what’s the problem?

 

[Sigmapolis]

Without a doubt the US economy is tied to globalization and technology, but when you leave out programs like NAFTA that allow US corporation to shift production to Mexico, receive tax breaks like they are building a plant in the US and pay their workers less, we have a problem.

What has happened we have switched from companies being loyal to their workers, to ones now tied to increasing the price of the stock. We are courting the shareholder now, not the people that are doing the actual labor in making the product. When 84% of the stock is owned by the top 10% of the population, we have a system that is skewed to those at the top.

Countries like Germany, have lower tax rates for companies building things in Germany, and higher tax rates for those the build it outside the country. They are trying to protect their workers, here in the US, the government could care less about the worker only those at the top and the stockholders.

So for many of us the stock market has little to no effect on our day to day lives because its just on paper. That has always been my point in this discussion, unless I can walk in and sell my 401K and receive the same amount as a person that can sell his stock, it really does not help me a whole lot. The two are not equal in any form or way.

I tend to think that 401K are great for the savvy investor that has the time to read up and do his homework, but the vast majority of people are not educated in it or do not want to learn. They throw their money into the account that someone has told them is a great investment and hope.

Labor leaders from the 1930s through the 1950s would find your notion "companies used to be loyal to their workers" sentiments pretty funny, if they were still alive.

Heck, labor and capital used to fight low-grade guerrilla wars against each other...

https://en.wikipedia.org/wiki/Colorado_Labor_Wars

Equities have been the best long-term investment one can make, though.

 

[DeereClone]

But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.
If defined benefits are such a loser like some claim, I would think every factory in America would be endorsing them instead of pulling away. Factories have learned that most young workers are not using their 401K program so the employer does not have to match much at all. But in a defined benefits program they have to put that money into the program. They have no choice. 401K help the employer in terms of costs, a lot more than a defined benefits program.
https://seekingalpha.com/article/4145460-much-401-k-lose-next-market-crash

You said it would be silly for someone that is 45 with $500,000 in the market to expect to have $500,000 or more when they retire at 59.5. Once again, I challenge you to back your assertion with any point in the history of the stock market where a 14.5 year time horizon resulted in lost money.

 

[VeloClone]

You said it would be silly for someone that is 45 with $500,000 in the market to expect to have $500,000 or more when they retire at 59.5. Once again, I challenge you to back your assertion with any point in the history of the stock market where a 14.5 year time horizon resulted in lost money.

Maybe they sunk all $500,000 in Cabbage Patch Kids and Beanie Babies.

 

[Doc]

Jeez, not a lot of optimism judging by the poll.

 

[Sigmapolis]

Jeez, not a lot of optimism judging by the poll.

I think most people are either in a "we're due" mentality and/or watching the inverted Treasury yields coming and going and thinking there is trouble on the horizon.

 

[SEIOWA CLONE]

You said it would be silly for someone that is 45 with $500,000 in the market to expect to have $500,000 or more when they retire at 59.5. Once again, I challenge you to back your assertion with any point in the history of the stock market where a 14.5 year time horizon resulted in lost money.

That is not what I said at all, sure the 45 year guy could recoup his loses, but the 57 year old guy sure as hell could not if he had planned to retire at 62. Here are my exact words.

"But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.

You morphed an earlier post and tried to combine the two. Here is the earlier post.

No one is saying they are not, but for a 45 year old guy with a half million in his 401K to think that the money or more will be there when he can draw it out at 59.5 is silly. It might be, but it might not. A lot of people I know lost hundreds of thousands in the last market crash, and this bull market cannot go on forever.

 

[Gunnerclone]

That is not what I said at all, sure the 45 year guy could recoup his loses, but the 57 year old guy sure as hell could not if he had planned to retire at 62. Here are my exact words.

"But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.

You morphed an earlier post and tried to combine the two. Here is the earlier post.

No one is saying they are not, but for a 45 year old guy with a half million in his 401K to think that the money or more will be there when he can draw it out at 59.5 is silly. It might be, but it might not. A lot of people I know lost hundreds of thousands in the last market crash, and this bull market cannot go on forever.

There’s nothing stopping that guy from moving to safety now in that situation if they feel that they need to do it. Bank that 500k and then spend the next however many years try to maximize return to a point with the new funds they add during that time.

 

[SpokaneCY]

That is not what I said at all, sure the 45 year guy could recoup his loses, but the 57 year old guy sure as hell could not if he had planned to retire at 62. Here are my exact words.

"But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.

You morphed an earlier post and tried to combine the two. Here is the earlier post.

No one is saying they are not, but for a 45 year old guy with a half million in his 401K to think that the money or more will be there when he can draw it out at 59.5 is silly. It might be, but it might not. A lot of people I know lost hundreds of thousands in the last market crash, and this bull market cannot go on forever.

As a guy who is retiring next year, I have zero intention of spending all my money on the first day. My plan is for the money to continue working for decades and decades. So a market dip next year has zero impact on my plans and what I can reasonably plan for over the course of my long retirement career.

 

[Sigmapolis]

That is not what I said at all, sure the 45 year guy could recoup his loses, but the 57 year old guy sure as hell could not if he had planned to retire at 62. Here are my exact words.

"But lets say I was retiring in 2008, my retirement account was cut in half. Now one is saying that long term, you are not better off in the market, but that is over a 20 to 40 year span.
A 57 year old guy in 2007, looking to retire at 62 would not have come close to doubling his money back.

You morphed an earlier post and tried to combine the two. Here is the earlier post.

No one is saying they are not, but for a 45 year old guy with a half million in his 401K to think that the money or more will be there when he can draw it out at 59.5 is silly. It might be, but it might not. A lot of people I know lost hundreds of thousands in the last market crash, and this bull market cannot go on forever.

If somebody is 57 and planning on retiring in five years and still 100% damn the torpedoes in equities instead of shifting into something more stable, then they are playing with fire and nobody else is to blame but themselves at that point for not shifting assets.

Risk tolerance is a young person's game, not one for those on the edge of retiring.

 

[CloneGuy8]

But they can and frequently do provide their matching funds in non-voting, company stock.

My company matches up to 6% of my contributions in company stock, but I have the option to then move that into something else. So I keep about 5% of my portfolio in company stock, and then move the excess to the S&P

 

[aeroclone]

So for many of us the stock market has little to no effect on our day to day lives because its just on paper. That has always been my point in this discussion, unless I can walk in and sell my 401K and receive the same amount as a person that can sell his stock, it really does not help me a whole lot. The two are not equal in any form or way.

I tend to think that 401K are great for the savvy investor that has the time to read up and do his homework, but the vast majority of people are not educated in it or do not want to learn. They throw their money into the account that someone has told them is a great investment and hope.

These statements couldn't be more off base. For starters, all gains on equity investments are just on paper until you liquidate back into cash. Whether they are in a 401k or not doesn't matter. If you buy a share of stock or an index fund in your 401k and the same one outside your 401k, and that equity goes up 10% in a year, then both your 401k and your traditional account are up 10%. Sure, if you want to cash out you will have to pay taxes, income on the 401k and cap gains on the traditional. But this is offset by the fact that you benefitted from investing pretax in the 401k vs post tax on the traditional. This isn't rigged for or against anyone, you just need to consider your plans for that money and leverage the appropriate tools to align with your goals.

And I would say a 401k is not at all for the savvy investor. A 401k for most people should be simple set it and forget it investing. Either plug it all into a target date fund that does all the work for you, or select a few low cost index funds and adjust on your own. Chip in with every paycheck, and keep at it for 30 years. Make sure you do enough to get your company match. Step up your amounts when you can. Done. Stock picking, options trading, market timing and day trading, all of the more sophisticated stuff isn't something anyone should be doing in a 401k with their retirement nest egg.