John Deere strike imminent?

alarson

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I agree and that is a problem. As someone who posts in the cave. I'd like to see more than just threads gone awry moved there.

Cave material is supposed to be based on topic, not level of acrimony.

Its odd. There's more in this thread that couldve gotten it caved than some others that got sent to the cave even just this week. Topics that weren't even necessarily as political as this one even (the southwest airlines thread, for example)
 

Sigmapolis

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I guess I haven't seen your math just differnent percentages representing different costs and RIO'S. It sure appears to me through your comparing apples and oranges. SS RIO's that include liabilities vs. stock market returns without liabilities.

The stock market returns are averages. Good years net of bad years. You knew that.

The rest of this is just trying to talk around the cold hard reality of SS’ awful ROI.
 

Althetuna

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The stock market returns are averages. Good years net of bad years. You knew that.

The rest of this is just trying to talk around the cold hard reality of SS’ awful ROI.
An apples-to-apples comparison would be the RIO's of federal bonds (what SS is "invested" in) vs stock market returns.

Even that comparison isn't a true apples-to-apples because it doesn't include the cost to manage each investment type.

No doubt federal bonds are going to generate less revenue but they are also considered to be the safer investment.
 

Sigmapolis

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An apples-to-apples comparison would be the RIO's of federal bonds (what SS is "invested" in) vs stock market returns.

Even that comparison isn't a true apples-to-apples because it doesn't include the cost to manage each investment type.

No doubt federal bonds are going to generate less revenue but they are also considered to be the safer investment.

Vanguard's expense ratio for an S&P 500 ETF is 0.03%.

That's a couple of orders of magnitude less than the difference in the real return from the S&P 500 in the long term (roughly 5% to 10% depending on exactly how and when you define "long term") and the same from Social Security (which, again, U.S. bonds historically return ≤ 0% in real terms, which sucks).

Vanguard is going to charge you $71 on $10,000 invested for 10 years.

Even a 5% return nets you $5,513 after ten years.

So you're still coming out $5,442 ahead even net of fees.

If Social Security returns 0% as it normal does, you're $5,442 behind already. Increase the contribution amount and the market return, and this becomes even more crazily lopsided.

Yeah, bonds are "safer," but no investment advisor recommends them being the *only* investment vehicle throughout your working life (and they are for many Americans through payroll taxes and the SSA). If you are in this for the long haul, then short-term losses matter little. The market has always rewarded those who stick it out. Forcing the poorest among us to invest so conservatively is not actually doing them any favors. It is risk-adverse to the point of destructiveness and hurting their chance to build some wealth.

Sometimes a pennywise -- being so adverse to risk -- is ultimately many pounds foolish.

The "safer investment" argument is also overblown. The circumstances that determine real returns from stocks and bonds are not independent of each other. A situation that would crash the market to the same degree it crashed in the late 1920s and early 1930s (e.g., a MAJOR war, a huge series of bank failures, or an Argentina-style run on U.S. debt and rampant inflation, etc.) would also reduce the real return on bonds.

Let's walk through an apples-to-apples example...

$15 / hour worker at 2080 hours per year = $31,200 working from age 21 to age 65
Assume one investment strategy with a 0% rate of return = Social Security
Assume another with a 5% (minus 0.03%) investment strategy = S&P 500 index fund
Saving 12.4% of their income (which is the total Social Security contribution)

In the end, the investor at 0% has $174,096.
The investor at a little less than 5% has $612,641.

The 0% investor has enough money to cover their preretirement income for 5.6 years.
The 5% investor has enough money to cover their preretirement income essentially forever.

A 5% return on $612,641 is $30,632 -- close to but not quite enough to cover $31,200 per year. Even if they live to be 100, they would still have $545,164 left. At the 0% return, the person who only had enough for 5.6 years has already outlived their retirement savings by at least three decades.

Do you not understand how powerful compound interest is in the long term?

I ran this model out into the far future and found out the 5% person only goes into the red once they turn 142. That's much better than going into the red when they turn 71, isn't it?

You're not doing people a favor. You're barring them from accruing long-term wealth. You can dress it up as helping them however you want to, but the numbers above settle the matter.
 
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Althetuna

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Vanguard's expense ratio for an S&P 500 ETF is 0.03%.

That's a couple of orders of magnitude less than the difference in the real return from the S&P 500 in the long term (roughly 5% to 10% depending on exactly how and when you define "long term") and the same from Social Security (which, again, U.S. bonds historically return ≤ 0% in real terms, which sucks).

Vanguard is going to charge you $71 on $10,000 invested for 10 years.

Even a 5% return nets you $5,513 after ten years.

So you're still coming out $5,442 ahead even net of fees.

If Social Security returns 0% as it normal does, you're $5,442 behind already. Increase the contribution amount and the market return, and this becomes even more crazily lopsided.

Yeah, bonds are "safer," but no investment advisor recommends them being the *only* investment vehicle throughout your working life (and they are for many Americans through payroll taxes and the SSA). If you are in this for the long haul, then short-term losses matter little. The market has always rewarded those who stick it out. Forcing the poorest among us to invest so conservatively is not actually doing them any favors. It is risk-adverse to the point of destructiveness and hurting their chance to build some wealth.

Sometimes a pennywise -- being so adverse to risk -- is ultimately many pounds foolish.

The "safer investment" argument is also overblown. The circumstances that determine real returns from stocks and bonds are not independent of each other. A situation that would crash the market to the same degree it crashed in the late 1920s and early 1930s (e.g., a MAJOR war, a huge series of bank failures, or an Argentina-style run on U.S. debt and rampant inflation, etc.) would also reduce the real return on bonds.

Let's walk through an apples-to-apples example...

$15 / hour worker at 2080 hours per year = $31,200 working from age 21 to age 65
Assume one investment strategy with a 0% rate of return = Social Security
Assume another with a 5% (minus 0.03%) investment strategy = S&P 500 index fund
Saving 12.4% of their income (which is the total Social Security contribution)

In the end, the investor at 0% has $174,096.
The investor at a little less than 5% has $612,641.

The 0% investor has enough money to cover their preretirement income for 5.6 years.
The 5% investor has enough money to cover their preretirement income essentially forever.

A 5% return on $612,641 is $30,632 -- close to but not quite enough to cover $31,200 per year. Even if they live to be 100, they would still have $545,164 left. At the 0% return, the person who only had enough for 5.6 years has already outlived their retirement savings by at least three decades.

Do you not understand how powerful compound interest is in the long term?

I ran this model out into the far future and found out the 5% person only goes into the red once they turn 142. That's much better than going into the red when they turn 71, isn't it?

You're not doing people a favor. You're barring them from accruing long-term wealth. You can dress it up as helping them however you want to, but the numbers above settle the matter.
Yes. I understand compound interest. You keep saying SS generates no revenue. Where are you getting that? SS holds government debt. That generates income which would also be compounded.

In addition, I see major issues with how funds are invested and who makes those decisions. You keep mentioning investing in the S&P 500. What an advantage you're giving these companies over all others with the infusion of capital these companies will receive.
 

Sigmapolis

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Yes. I understand compound interest. You keep saying SS generates no revenue. Where are you getting that? SS holds government debt. That generates income which would also be compounded.

In addition, I see major issues with how funds are invested and who makes those decisions. You keep mentioning investing in the S&P 500. What an advantage you're giving these companies over all others with the infusion of capital these companies will receive.

Do you understand the difference between nominal and real returns or do I need to explain that?

Yes, SS generates a return, but its return over inflation is meager. Saying it is 0% is probably slight overstatement on my part, but it is still meager real return at 1% or 2% compared to what you can expect from the historical return of the S&P 500. Even a few extra percent of compound interest over a lifetime leads to huge differences.

As to your second point, so? Public retirement agencies, like Railroad Retirement and state university endowments and CALPERS and IPERS are already in the market. Heck, IPERS is in PE now, if you want to talk about picking winners and losers. I don’t see why this would be any different, and picking an index fund loaded with the 500 most valuable U.S. companies is about the most neutral way possible to do it.
 
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BigM

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You seem to think the market has little or no risk for those involved, and if they just wait it out, then they will be far ahead over what they would be in a regular investment type program. You may be, or you may not be, but being in the market is no guarantee of wealth in the future.

You would rather be in the market, you seem to think you have a better idea of where and how to invest that money that will do the best for you. How many others have that same level of knowledge and confidence to do the same? Most would say few, you will respond that they can learn, which is true, but many they do not want to, or choose not too.

Its all about risk and reward, some people just do not to risk their future retirement, no matter how big the reward might be.
Literally all of the world's largest pensions are in the market, with the very notable exception of US Social Security. Look at the massive Canadian plans, or the Dutch plans, or the ones from Texas or California, even IPERS

1634294562497.png

take a look how diversified IPERS is, diversification reduces risk and these pension plans all grow every year.

It is simple math, in the long run, you always win by being in the market.
 
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frackincygy

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Vanguard's expense ratio for an S&P 500 ETF is 0.03%.

That's a couple of orders of magnitude less than the difference in the real return from the S&P 500 in the long term (roughly 5% to 10% depending on exactly how and when you define "long term") and the same from Social Security (which, again, U.S. bonds historically return ≤ 0% in real terms, which sucks).

Vanguard is going to charge you $71 on $10,000 invested for 10 years.

Even a 5% return nets you $5,513 after ten years.

So you're still coming out $5,442 ahead even net of fees.

If Social Security returns 0% as it normal does, you're $5,442 behind already. Increase the contribution amount and the market return, and this becomes even more crazily lopsided.

Yeah, bonds are "safer," but no investment advisor recommends them being the *only* investment vehicle throughout your working life (and they are for many Americans through payroll taxes and the SSA). If you are in this for the long haul, then short-term losses matter little. The market has always rewarded those who stick it out. Forcing the poorest among us to invest so conservatively is not actually doing them any favors. It is risk-adverse to the point of destructiveness and hurting their chance to build some wealth.

Sometimes a pennywise -- being so adverse to risk -- is ultimately many pounds foolish.

The "safer investment" argument is also overblown. The circumstances that determine real returns from stocks and bonds are not independent of each other. A situation that would crash the market to the same degree it crashed in the late 1920s and early 1930s (e.g., a MAJOR war, a huge series of bank failures, or an Argentina-style run on U.S. debt and rampant inflation, etc.) would also reduce the real return on bonds.

Let's walk through an apples-to-apples example...

$15 / hour worker at 2080 hours per year = $31,200 working from age 21 to age 65
Assume one investment strategy with a 0% rate of return = Social Security
Assume another with a 5% (minus 0.03%) investment strategy = S&P 500 index fund
Saving 12.4% of their income (which is the total Social Security contribution)

In the end, the investor at 0% has $174,096.
The investor at a little less than 5% has $612,641.

The 0% investor has enough money to cover their preretirement income for 5.6 years.
The 5% investor has enough money to cover their preretirement income essentially forever.

A 5% return on $612,641 is $30,632 -- close to but not quite enough to cover $31,200 per year. Even if they live to be 100, they would still have $545,164 left. At the 0% return, the person who only had enough for 5.6 years has already outlived their retirement savings by at least three decades.

Do you not understand how powerful compound interest is in the long term?

I ran this model out into the far future and found out the 5% person only goes into the red once they turn 142. That's much better than going into the red when they turn 71, isn't it?

You're not doing people a favor. You're barring them from accruing long-term wealth. You can dress it up as helping them however you want to, but the numbers above settle the matter.
Sig -
Really appreciate your insightful responses as they've gotten me to ponder what you're proposing.

I do have two questions though:
1) Doesn't the nature of SS (i.e. retired/qualified folks are ALWAYS withdrawing funds from it) almost require it to be in a bond-type conservative investment?
What I mean is while an individual's (and particularly a young individual) investment account can survive the ups/downs of the market and be better off in the long run - most financial advisors would recommend switching investments heavily towards bonds as you're nearing the age you'll actually need to use the funds; since SS is "always" needed doesn't that steer it towards bonds?

2) ETFs tracking a broader market index (S&P 500) are great, but what about the saying "more money, more problems" - I mean on the scale of SS we're talking trillions of dollars in that index - does that create any issues? Maybe it doesn't, just something I've been pondering.
 

dosry5

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You’re right and I shouldn’t have used that term. But still, they are being asked to work 72 hour weeks doing physical labor in order to hurt striking workers - that’s a big demand of them by Deere
I’m sure that’s right. There was a smoke filled boardroom where the big wigs at JD got together and and somebody said “let’s demand they work 72 hour weeks in order to hurt the union members!
I’m sure in multi billion dollar corporations that’s exactly how decisions are made—with the desire and/or to hurt the workers.
 

Althetuna

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Do you understand the difference between nominal and real returns or do I need to explain that?

Yes, SS generates a return, but its return over inflation is meager. Saying it is 0% is probably slight overstatement on my part, but it is still meager real return at 1% or 2% compared to what you can expect from the historical return of the S&P 500. Even a few extra percent of compound interest over a lifetime leads to huge differences.

As to your second point, so? Public retirement agencies, like Railroad Retirement and state university endowments and CALPERS and IPERS are already in the market. Heck, IPERS is in PE now, if you want to talk about picking winners and losers. I don’t see why this would be any different, and picking an index fund loaded with the 500 most valuable U.S. companies is about the most neutral way possible to do it.
To be clear, at no point in any of your posts did you note the values you were using were indexed against inflation. Does this include the returns you provided for the S&P?

So do actually have an accurate number for what SS throws off for profit or are you simply making your best guestimate?

Of course, there are TIPS which can be as a hedge against inflation.

Finally the size of the funds you cited are large but are dwarfed by the size of SS. Calipers, for example, has 1.6 million members. The adult population of the United States is 258 million. The affect of SS being invested in publicly traded companies will have affect much like 401K's did onlybthos will be on a much larger scale.


Most of these are managed by outside groups nut influenced by its membership. I belong to a pension fund and the membership restricted the management company which stocks they could invest for reasons other than economy.

I see the system you're proposing being subjected to the same pressures. How excited would Americans be about investing SS monies in Alphabet (Google), Facebook and Amazon right now? I could easily see a political party threaten a specific company by eliminating it from SS funds.

Finally, SS was never intended to be a retirement fund. Its design was to protect elderly from extreme poverty.
 
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Cyclonepride

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Literally all of the world's largest pensions are in the market, with the very notable exception of US Social Security. Look at the massive Canadian plans, or the Dutch plans, or the ones from Texas or California, even IPERS

View attachment 90835

take a look how diversified IPERS is, diversification reduces risk and these pension plans all grow every year.

It is simple math, in the long run, you always win by being in the market.

Aren't some of those pension plans guaranteed a certain rate of return (thus leading to some budget problems)? Not really arguing against being in the market. Just clarifying
 

BWRhasnoAC

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True, it doesn't run itself. Deere needs welders, CNC operators, drivers, etc. All of these people bring a skill that the is critical to operating the company, same as managing and overseeing the company is a skill that the CEO brings.

As you say, $14.5M is a drop in the bucket for JD to pay someone with management skills. My question is again, why are those skill deemed so much more valuable than a welder or a machinist? What justifies a 240:1 pay ratio between the CEO and the base level employee?
Greed.
 

BigM

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Aren't some of those pension plans guaranteed a certain rate of return (thus leading to some budget problems)? Not really arguing against being in the market. Just clarifying
No, no one is guaranteed a return, in private markets (my space) funds advertise a target return, and are incentivized to make it through things like carried interest and performance bonuses, but nothing is guaranteed
 

Cyclonepride

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No, no one is guaranteed a return, in private markets (my space) funds advertise a target return, and are incentivized to make it through things like carried interest and performance bonuses, but nothing is guaranteed

Perhaps that has been phased out?


"Tier 1 employees, hired before 1996, are guaranteed a rate of return on their account balances equal to the assumed earnings rate, which has varied from 5 percent to 8 percent annually."
 
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mramseyISU

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Not totally true. There IS lots of robotic welding going on, but there are whole weld departments that are 100% manual welding.
There isn't much for manual welding going on, at least not at TCAO. The ROPS frames were pretty much all robotically welded. No idea what's happening at other sites since I haven't really spent a lot of time in any of the buildings down in the QC.
 

mramseyISU

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Ya, totally not true. It's working 8 hours a day, 5 days a week initially. And then we get paid our current salary. IF we get scheduled overtime, we get paid that also. Aren't even going to be welding anytime soon in the factory. So, don't know where this info came from but it is 100% wrong.
It seems like it's all dependent on what division you work for. If this thing drags out for a couple weeks I have to go into TCAO and my hours as of right now are supposed to be 7-5:30 with no weekends. I haven't heard anything about these extra payments some people are talking about either. My wife works for Powersystems and she's one of the people being picked to stay out of the factory and try and cover for the people that have to cross the lines. They were told to plan on 12hr days during the week and probably 8 or Saturdays I think she said.
 
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