Stock market

With the banks paying huge fines I don't understand the statement that there are no consequences. Maybe not the consequences that would satisfy you, which would probably entail individuals going to jail, but consequences nonetheless. One could argue that the system worked-- WF got caught and not only did the CEO get his ears boxed by Congress in front of the entire country, he had to resign. There is even talk of clawing back the stupidly high bonuses that he and the lady that left earlier (which is the real crime, I'd agree).

NOHOME wrote: My other point would be "How did it come to be that the Stock markets of the world have come to be the only place to put your money other than under the mattress? Would you argue that it was not engineered to happen that way? by the way, under the mattress is the accepted method on non-traditional banking. Stuffing the mattress full of cash results in a very lumpy mattress.

No, I do not believe it is engineered that the stock market is the only place. It's just the best one over the long haul.

You are welcome to invest in gold, real estate, pork bellies, collectible baseball cards, or whatever other form you choose.

I have 1 small retirement account I have put a total of about $12,000 in over the last 8 years. It's worth $33,000.

I have another account that was purchased for me by my grandfather 41 years ago. He bought $1000 worth of stock. I have put exactly $0 in this account since then. The only increase has been growth and dividend reinvestment. Today, it is worth $62,000.

I could not have done that with money in my mattress.

And for the record, I suck at the market. I am ashamed how ignorant I am. I don't trade, I just invest small amounts and sit on it. ANYONE could do it. And anyone who is not doing it, is missing a great opportunity.

NOHOME wrote:

The fact that WF did something inappropriate means they should face appropriate consequences, not be used as de facto proof that the stock market is rigged against us all and we should all therefore stuff our money in our mattresses.

My other point would be "How did it come to be that the Stock markets of the world have come to be the only place to put your money other than under the mattress? Would you argue that it was not engineered to happen that way?

The stock market is just the vehicle, not the place. I put my money in companies (and bonds and metals and other things). The vehicle for doing that is the stock market (companies through their stocks, bonds and other things through index funds and ETF's, through the stock market).

I guess the only things that I don't do through the stock market are cars, guitars, and my house.

SVreX wrote: And for the record, I suck at the market. I am ashamed how ignorant I am. I don't trade, I just invest small amounts and sit on it. ANYONE could do it. And anyone who is not doing it, is missing a great opportunity.

You are probably better off for not trading. I referenced a friend up thread who's 50% cash right now. HE can trade. He has a Bloomberg terminal at home and he knows WTF he's doing. His recommendation to me (and most people): 2/3 SP 500 fund (SPY), 1/3 in an international equities ETF. Done.

&

Basil Exposition wrote: With the banks paying huge fines I don't understand the statement that there are no consequences. Maybe not the consequences that would satisfy you, which would probably entail individuals going to jail, but consequences nonetheless. One could argue that the system worked-- WF got caught and not only did the CEO get his ears boxed by Congress in front of the entire country, he had to resign. There is even talk of clawing back the stupidly high bonuses that he and the lady that left earlier (which is the real crime, I'd agree).

The fines that the banks pay are covered by the shareholders though. The perpetrators get away with a slap on the wrist. 'The lady that left earlier' got $124 million when she left. To date, they've recovered $19 million from her, and could take back as much as $30 million more depending on the results of WF's internal investigation. So, she walked out the door with a minimum of $75 million. Plus her $90 million in compensation throughout her career. What's that $90 million worth if she invested most of it and saw average returns?

This woman's annual compensation was around 9 million. So, her maximum potential losses here would be as about 5 years pay. For the average person, losing 5 years pay would be crippling. For people this wealthy, it's barely a deterrent. How much does losing $40 million matter when you're worth $300 million?

I'm not a fear monger when it comes to Wall Street, but this case is pretty troubling if you read into it, and although some execs are being dragged in front of congress for a stern talking to, they're still walking away with a fortune intact. It's easy for me to understand why an average person would become disillusioned when they have to pay for the mistakes of an exec worth hundreds of millions.

In reply to STM317:

Those "perpetrators" work FOR the shareholders.

I am no fan of overpaid executive compensation, but it is a completely different problem. Every shareholder of every company has a right to voice their opinion on issues like that, and usually to show up to shareholder's meetings. If they want to change the compensation scale, they are welcome to do it.

Most of us would be perfectly happy working for a company that significantly overpaid us. Blaming execs for doing the same thing is just jealousy.

And the fines SHOULD be paid by the stockholders. Just like all other business expenses. THEY are the OWNERS.

If the exec is charged individually with a criminal act, that would be different.

In reply to SVreX:

I'm not blaming execs for taking high pay rates at all. If a person can legitimately steer a large, multi-billion dollar corporation then their services will be in high demand, and they'll be paid accordingly. In this case however, I'm blaming them for using what investigators have called "abusive practices" to justify outrageous bonuses as was the case with this individual from WF. They weren't happy making just a couple million per year, so they instituted a culture that promoted fraud in order to show performance that wasn't actually there. And on the way out, they took a massive paycheck while the company (shareholder) is left to foot the bill. That's silly greed that the average man (whether it's the share holder or the taxpayer) takes on the chin while the execs retire in disgrace to their mansions and private planes. They may all own shares of the company just as the execs do, but the execs aren't impacted nearly as much by their own failures.

Edit: we've gotten off track here now, so I'll leave the subject of WF where it is, and say to the OP that I wouldn't pull anything from the market unless you'll be needing those liquid assets in the very near future. If you're in position to hold long term, you'll likely be much better off.

In reply to STM317:

Right. Sounds like the shareholders need to run them out, and make sure they don't get a golden parachute.

It's the stockholder's job to make failures like that painful to the execs. Not the government, or the "system".

That's not an example of inadequate consequences. It's an example of inadequate action taken on the part of the OWNERS.

SVreX wrote: In reply to STM317: Right. Sounds like the shareholders need to run them out, and make sure they don't get a golden parachute. It's the stockholder's job to make failures like that painful to the execs. Not the government, or the "system". That's not an example of inadequate consequences. It's an example of inadequate action taken on the part of the OWNERS.

The OWNERS of the company let the board handle decisions like those, much like the people of the US let Congress handle most of the legislative decision making. They may have some control over who ends up there, and how long they stay, but the chosen individuals are free to make their own decisions while occupying that very plushy seat. If they screw up badly enough to get kicked out, they've already made their mountain of money, so it's no skin off their back.

Plus, in many cases the BOD members hold a controlling number of shares and the shares out there in general circulation don't amount to enough to be a meaningful voice - especially when those shares are also spread out among who knows how many mutual funds and individual holders. Plus, some shares have more "voting rights" than general shares, depending on how the IPO was originally made. There are also types of shares that have no voting rights at all.

In reply to dculberson:

I posted my opinion in this thread just like the other 15 or so people. I'm sorry that you found my opinion not constructive and not interesting. I'm not sure if you live in some alternate pre-2008 universe or if you are just generally unaware of what happened in 2008, but I see you don't want to consider any point of view that differs from your own, so I wish you all the best in whatever it is you want to believe and invest in. I'll stay out of this thread going forward so as not to bore you. Sorry for intruding.

In reply to T.J. and dculberson:

I think you are both right, except for the butt-hurt part.

In reply to T.J.:

Did you read the op's question? Were you trying to answer it or just railing against the machine? I am a practical person and try to give helpful advice and input. I do apologize for my tone, sometimes I apparently can't help but be overly blunt.

mfennell wrote: His recommendation to me (and most people): 2/3 S&P 500 fund (SPY), 1/3 in an international equities ETF. Done.

This is absolutely the best advise in this thread. There are very few people that have been able to consistently beat the market over a 20-30 year period. Just keep putting money in and try not to worry, don't look at it.

Read this about market speculation

One of my favorite quotes, "The stock market has forecast nine of the last five recessions" - Paul Samuelson

Interesting (unexpected) reaction from the market so far today.

STM317 wrote: Interesting (unexpected) reaction from the market so far today.

I'm spotting a pattern. The market merely flinches at the promise of a future damaging event. It doesn't really move until the damage is imminent.

It makes sense - make hay while the sun shines, even if the sun is shining on a spot where a piano will fall in 10 minutes.

STM317 wrote: Interesting (unexpected) reaction from the market so far today.

As a student of Economics, I do not find the rally surprising. One candidate was strongly pro-business. The other strikingly less so. I think a lot of people have been deceived by the fearmongering perpetuated by an agenda-driven press.

dculberson wrote: Amazingly enough the people making the doom and gloom proclamations about the market do not often come up with ideas about where to park one's retirement money. Should we be stuffing it in mattresses? Ammo? Dried beans and rice in the basement? What's the 30 year average annual return on a shed full of beans?

I bought land.

In reply to Huckleberry:

Is it income producing land? What has been your net return after paying the bills and property taxes and income taxes? Have you liquidated any of it?

Curious, because I have also considered it. Just haven't been able to make the numbers work yet.

STM317 wrote: Interesting (unexpected) reaction from the market so far today.

Supposed to be a disaster and now close to all time highs for the DOW. Is it just wishful thinking from the losing side that WANTS a catastophe so they can say "Look I told you so". When that doesn't happen, what does it actually mean?

The world markets started spiraling last night, hence the fear of our markets following suit. Don't forget the Comey to Comey drop in the market last week too. There was no wishful thinking on the "losing side".

I'm glad they didn't. I already lost half my 401K in 2008 and I would like to keep the other half intact.

Our country (i.e. two governing bodies)spent 8 years shooting ourselves in the foot to prove the winner was a bad idea. No reason to continue that ideology now that the other side is in power.

NEALSMO wrote: ...I already lost half my 401K in 2008 and I would like to keep the other half intact..

How did you manage that? Sell when it was down?

The market recovered back to that peak in 2013 (e.g. your half should have reappeared then).

aircooled wrote:

NEALSMO wrote: ...I already lost half my 401K in 2008 and I would like to keep the other half intact..

How did you manage that? Sell when it was down? The market recovered back to that peak in 2013 (e.g. your half should have reappeared then).

Remember kids, investing is like driving a 911 10/10’s in a tune…never, never, never lift.

RX Reven' wrote: Remember kids, investing is like driving a 911 10/10’s in a tune…never, never, never lift.

You know, I'm no economicist but that really speaks to me in ways I can understand.

Follow up question. I heard this morning the Peso tanked rather badly. If that's true, and it hasn't recovered today, should a guy take some disposable cash and buy the peso? For all the posturing by the new chief Oompa Loompa, I don't see Mexico sliding into the Pacific anytime soon.