In the most recent economic boondoggle, 401(k)s lost trillions of dollars as they were predominantly invested in the stock market. Were those losses shared by any of the Wall Street concerns or the Fed? That answer would be a resounding no.
The baby boomers have been sold a massive bill of goods. This started back in grammar school and continued right through college. This myth was based upon certain principles that were geared to reward conformity and ultimately punish any pursuit outside the realm of the status quo. While this indoctrination was not transparent or even evident, it has clearly surfaced today and is being unashamedly enacted upon the coming youth.
The principles of financial conformity are as follows:
- Tax deferral is always best. (This was a big lie.)
- Maxing out qualified retirement plans is your best move. (This was a white lie.)
- Diversifying your portfolio with mutual funds is wise. (This was a fee grab lie.)
- Keeping your money in the market is always best. (This was a commission grab lie.)
- Use leverage with low interest rates. (This was a banking manipulation lie.)
While some of these financial thoughts are reasonably good ideas, it has proven true that all financial strategies change over time and that the changing of the times makes history and past trends meaningless. New pioneers are always seeking ways to improve financial returns and to create a new cycle in the free market enterprise system. When that system is artificially controlled by government intrusion, it puts the balance of order well out of whack.
Today the “fool’s gold” is the belief that the stock market is an even-balanced game that can help individuals create wealth. It isn’t even close; it is simply a modicum for institutions (banks, hedge funds, equity funds, etc.) to make huge profits while playing a totally fixed game. Wall Street continues to play a zero-sum game while passing all risk onto the individual investor. Look, the longer you try to beat the house in a fixed game, the more you lose. Of course they have to allow you a few wins in order to keep you coming back for more pain.
But I digress; the purpose of this article is to focus on the most dangerous scenario presently facing your retirement and your clients’ retirement. If you are one of the many who have monies in an ERISA-based retirement plan (401(k)s, IRAs, HR10, Keoghs, etc.), then you are sitting on a ticking time-bomb which the government fully plans to explode on you. How, you ask? In the most recent economic boondoggle, 401(k)s lost trillions of dollars as they were predominantly invested in the stock market. Were those losses shared by any of the Wall Street concerns or the Fed? That answer would be a resounding no.