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> I think it's great that they are essentially "recycled" when new, better companies come along and eat their lunch. Don't you have on the order of tens of tho

> I think it's great that they are essentially "recycled" when new, better companies come along and eat their lunch. Don't you have on the order of tens of thousands of dollars invested in Intel through retirement savings, though? When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)

pantulis 4y ago
Not a US citizen, but aren't the retirement funds managed by someone who should be held responsible for not diversifying?
- katmannthree 4y ago
  Whether or not they're ``held responsible'' to the degree anyone in such a position in the US is (i.e. lolno), grocery stores and retirement homes do not accept epicaricacy as payment.
- jrockway 4y ago
  Retirement funds do pretty OK here. Early in your career you'll mostly hold something like an S&P 500 index fund or a total stock market fund, as you get closer to retirement they shift the allocation towards safer investments. I don't love this; the total stock market is a lot of tech companies, and I already have plenty of exposure to tech by working in the field. It's a good heuristic for most people, though. (And no, I don't do anything about this underlying fear of tech sector exposure. I just buy the Target Date 20XX funds like everyone else.) My only point is that the grandparent comment generally expects companies to die when they get into the S&P 500. If that's true, we're all screwed. If one S&P 500 is just stealing business from some other S&P 500 company, though, it's probably a net gain. But if it's some privately owned startup, then it's not as concrete a win, and let's be honest, startups are driving a lot of the innovation in tech.
  - JamesianP 4y ago
    Which retirement funds are doing ok this time around? They typically switch to bonds which thanks to inflation are down something like 20 percent in the last year (some more like 30), despite yielding far less than stocks in the best of times.
    - jrockway 4y ago
      It's the right strategy in general, not a strategy guaranteed to never lose money. Your savings account is down 20% year over year in terms of purchasing power because what $1 is changed dramatically. Rare event, and sometimes you're just screwed. If I had a time machine, I would definitely use it to time the market!
      - JamesianP 4y ago
        People who are retired, and have absolutely no way to bounce back if the market is unkind, should absolutely invest in places that never lose money. I'm not talking about inflation. I can go out and buy actual guaranteed bonds that pay me an actual guaranteed positive interest rate. Yeah they don't keep up with inflation, but it only a small trickle in lost earning power at that point, not a loss of 1/5 of the number of years I can stay retired which the funds are delivering. My savings account is not what I'm talking about. Inflation or not, it is still a number I can describe as "positive". I'm referring to bonds that retirement and wealth management add to funds use to supposedly counter volatility. These are investments that at best will only pay single digits. They have suffered the worst year since 1931 or something. And we're just getting going. The frustrating part is as I said, the underlying bonds themselves still pay that 4% or so which would be much better than the funds are achieving. But for some reason they have to sell the bonds at a loss.
- JamesianP 4y ago
  Nope! They're rewarded for getting slightly higher returns than other funds during the bull market times, despite the disproportionate increase in risk they take on to do it. Everyone is looking at recent trends and almost no one looks tat fundamentals. It's a moral hazard.
- fsckboy 4y ago
  > the retirement funds managed by someone who should be held responsible for not diversifying? fund managers don't have "personal" or "corporate" assets that are anywhere near the scale of the (retirement) funds they manage; being held responsible for mismanagement would not lead to a source of capital to replace that which had been lost through mismanagement. All investment has risk.
- anotherman554 4y ago
  In the US usually the employee usually has a choice of several funds in their 401 (k) retirement account, including international funds. It seems the person upthread owns a target date fund and this means they probably are diversified. Their post doesn't make a lick of sense.
  - JamesianP 4y ago
    If this is referring to me, then perhaps you're confused because I was responding to a question about rewards and punishments not whether labels fit. And I never claimed the the question and my response were somehow opposite ends of a dichotomy. Indeed the connection there is the problem. A fund can be completely diverse and still high-risk.
    - deleted 4y ago
      [deleted]
    - anotherman554 4y ago
      I was not referring to you. I was referring to the person who wrote this over the top, inaccurate comment: "When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)"
longtimelistnr 4y ago
Isnt this only a concern if you plan to retire in the next 5 ish years? Even 5 years seems a while to correct itself unless there’s a larger market implosion. The last 5 years has seen the tail end of a recession and a pandemic
ISL 4y ago
If you're invested broadly in the S&P, so long as companies are "properly" valued, it is okay if INTC falls and AMD rises. If a major player is massively overvalued, though, then index funds, too, will feel some pain as the exuberance in a major player dissipates. I hold some INTC directly after having been extremely impressed with the company's dedication to rigorous process in engineering interviews in the mid-2010s. I'm sad to see such a great company go through hard times.
deleted 4y ago
[deleted]
twelve40 4y ago
intel doesn't have to go up in flames, not sure why you view it as all or nothing. They can keep milking legacy stuff and even make money like IBM (what paul graham calls irrelevant), while someone else can keep inventing better chips.
nemothekid 4y ago
>Don't you have on the order of tens of thousands of dollars invested in Intel through retirement savings, though? Why is my fund in Intel but not in Apple? The whole point of choosing the index is so that you are diversified. You would only lose if Intel lost out to a foreign company, otherwise the demise of Intel is made palatable by the rise of Apple and AMD.
- bluGill 4y ago
  Even if intel loses to a foreign company, odds are that foreign company has been invested in my a domestic company I own so I'm still okay.
vineyardmike 4y ago
Over time, those funds are re-weighted. Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly
- kgwgk 4y ago
  S&P 500 trackers are not re-weighted.
  - vineyardmike 4y ago
    Standard and Poors periodically updates the S&P 500 with the 500 largest companies. Intel will one day likely be removed, just like one day apple will be. It may be a while but it’ll happen. Companies come and go from it all the time: https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
    - kgwgk 4y ago
      In the context of your comment "Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly" I would find little comfort in the fact that if Intel goes down 85% -slowly but somewhat spectacularly- from its current level it will eventually be excluded from the index.
      - vineyardmike 4y ago
        Cisco used to have a massive market cap. Greatest in the country. Now it’s absolutely unremarkable compared to FAANG et al. It went from $80 to $12. The fact that I had to google for the details of its fall gives me comfort that when intels time comes it won’t cause harm on its slow exit.
        kgwgk 4y ago
        The only harm done is the money lost on that particular investment, of course.

pantulis 4y ago

Not a US citizen, but aren't the retirement funds managed by someone who should be held responsible for not diversifying?

katmannthree 4y ago
Whether or not they're ``held responsible'' to the degree anyone in such a position in the US is (i.e. lolno), grocery stores and retirement homes do not accept epicaricacy as payment.
jrockway 4y ago
Retirement funds do pretty OK here. Early in your career you'll mostly hold something like an S&P 500 index fund or a total stock market fund, as you get closer to retirement they shift the allocation towards safer investments. I don't love this; the total stock market is a lot of tech companies, and I already have plenty of exposure to tech by working in the field. It's a good heuristic for most people, though. (And no, I don't do anything about this underlying fear of tech sector exposure. I just buy the Target Date 20XX funds like everyone else.) My only point is that the grandparent comment generally expects companies to die when they get into the S&P 500. If that's true, we're all screwed. If one S&P 500 is just stealing business from some other S&P 500 company, though, it's probably a net gain. But if it's some privately owned startup, then it's not as concrete a win, and let's be honest, startups are driving a lot of the innovation in tech.
- JamesianP 4y ago
  Which retirement funds are doing ok this time around? They typically switch to bonds which thanks to inflation are down something like 20 percent in the last year (some more like 30), despite yielding far less than stocks in the best of times.
  - jrockway 4y ago
    It's the right strategy in general, not a strategy guaranteed to never lose money. Your savings account is down 20% year over year in terms of purchasing power because what $1 is changed dramatically. Rare event, and sometimes you're just screwed. If I had a time machine, I would definitely use it to time the market!
    - JamesianP 4y ago
      People who are retired, and have absolutely no way to bounce back if the market is unkind, should absolutely invest in places that never lose money. I'm not talking about inflation. I can go out and buy actual guaranteed bonds that pay me an actual guaranteed positive interest rate. Yeah they don't keep up with inflation, but it only a small trickle in lost earning power at that point, not a loss of 1/5 of the number of years I can stay retired which the funds are delivering. My savings account is not what I'm talking about. Inflation or not, it is still a number I can describe as "positive". I'm referring to bonds that retirement and wealth management add to funds use to supposedly counter volatility. These are investments that at best will only pay single digits. They have suffered the worst year since 1931 or something. And we're just getting going. The frustrating part is as I said, the underlying bonds themselves still pay that 4% or so which would be much better than the funds are achieving. But for some reason they have to sell the bonds at a loss.
JamesianP 4y ago
Nope! They're rewarded for getting slightly higher returns than other funds during the bull market times, despite the disproportionate increase in risk they take on to do it. Everyone is looking at recent trends and almost no one looks tat fundamentals. It's a moral hazard.
fsckboy 4y ago
> the retirement funds managed by someone who should be held responsible for not diversifying? fund managers don't have "personal" or "corporate" assets that are anywhere near the scale of the (retirement) funds they manage; being held responsible for mismanagement would not lead to a source of capital to replace that which had been lost through mismanagement. All investment has risk.
anotherman554 4y ago
In the US usually the employee usually has a choice of several funds in their 401 (k) retirement account, including international funds. It seems the person upthread owns a target date fund and this means they probably are diversified. Their post doesn't make a lick of sense.
- JamesianP 4y ago
  If this is referring to me, then perhaps you're confused because I was responding to a question about rewards and punishments not whether labels fit. And I never claimed the the question and my response were somehow opposite ends of a dichotomy. Indeed the connection there is the problem. A fund can be completely diverse and still high-risk.
  - deleted 4y ago
    [deleted]
  - anotherman554 4y ago
    I was not referring to you. I was referring to the person who wrote this over the top, inaccurate comment: "When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)"

longtimelistnr 4y ago

Isnt this only a concern if you plan to retire in the next 5 ish years? Even 5 years seems a while to correct itself unless there’s a larger market implosion. The last 5 years has seen the tail end of a recession and a pandemic

ISL 4y ago

If you're invested broadly in the S&P, so long as companies are "properly" valued, it is okay if INTC falls and AMD rises. If a major player is massively overvalued, though, then index funds, too, will feel some pain as the exuberance in a major player dissipates. I hold some INTC directly after having been extremely impressed with the company's dedication to rigorous process in engineering interviews in the mid-2010s. I'm sad to see such a great company go through hard times.

deleted 4y ago

[deleted]

twelve40 4y ago

intel doesn't have to go up in flames, not sure why you view it as all or nothing. They can keep milking legacy stuff and even make money like IBM (what paul graham calls irrelevant), while someone else can keep inventing better chips.

nemothekid 4y ago

>Don't you have on the order of tens of thousands of dollars invested in Intel through retirement savings, though? Why is my fund in Intel but not in Apple? The whole point of choosing the index is so that you are diversified. You would only lose if Intel lost out to a foreign company, otherwise the demise of Intel is made palatable by the rise of Apple and AMD.

bluGill 4y ago
Even if intel loses to a foreign company, odds are that foreign company has been invested in my a domestic company I own so I'm still okay.

vineyardmike 4y ago

Over time, those funds are re-weighted. Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly

kgwgk 4y ago
S&P 500 trackers are not re-weighted.
- vineyardmike 4y ago
  Standard and Poors periodically updates the S&P 500 with the 500 largest companies. Intel will one day likely be removed, just like one day apple will be. It may be a while but it’ll happen. Companies come and go from it all the time: https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
  - kgwgk 4y ago
    In the context of your comment "Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly" I would find little comfort in the fact that if Intel goes down 85% -slowly but somewhat spectacularly- from its current level it will eventually be excluded from the index.
    - vineyardmike 4y ago
      Cisco used to have a massive market cap. Greatest in the country. Now it’s absolutely unremarkable compared to FAANG et al. It went from $80 to $12. The fact that I had to google for the details of its fall gives me comfort that when intels time comes it won’t cause harm on its slow exit.
      - kgwgk 4y ago
        The only harm done is the money lost on that particular investment, of course.