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The US crash of 2008 exposed the nature of their banking system leverage ratios, and worker 401k vulnerability to dubious ETFs. The incoming market volatility
by Joel_Mckay 2y ago
The US crash of 2008 exposed the nature of their banking system leverage ratios, and worker 401k vulnerability to dubious ETFs.
The incoming market volatility will likely have winners and losers... but historically it was mostly losers (>6.4 million families and counting.) =3
- throwaway2037 2y ago> worker 401k vulnerability to dubious ETFs Can you explain this part in my detail? Do you mean money market funds that "broke the buck"?
- lxm 2y agoETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a single stock - employer's.
- Joel_Mckay 2y ago[flagged]
- nradov 2y agoETFs are mostly irrelevant from a 401(k) perspective because no one is trading on a daily basis. Some 401(k) plans do now offer ETFs among the investment options but for the most part they have always focused on regular mutual funds. Average expense ratios have come down a bit since 2008.
- Joel_Mckay 2y agoRegular mutual funds usually have higher risk and tax exposure than the ETFs... Met a lot of bums in suits trying to sell me on several flavors of BS over the years. lol =3
- throwaway2037 2y ago> Regular mutual funds usually have higher risk ... than the ETFs. Can you provide some specific examples? If anything, the transaction friction around mutual funds prevents most regular investors from unnecessary trading that exchange-listed ETFs allow. TL;DR: For most people, more trading means more losses or worse returns.
- Joel_Mckay 2y agoThere are several potential mutual fund problems, but the ones most consumers are exposed to arise from institutional and private "investment advisors". There is no legal protection from banks externalizing toxic assets acquired though risky decisions onto customers, and or ridiculous ballooning management fees siphoning off actual profit. The other issues are mostly from various end-runs around acceptable market rules and practices. In general, most amateur holds permute well below 3 to 4 months on average. Note the old joke: "Bulls make money, bears make money, pigs get slaughtered"... was never funny for those providing cash capital to gamblers. Most people assume they are luckier than average... and most of Las Vegas was also built on losers money. Have a great day, =3
- JumpCrisscross 2y agoYou’re mixing up adviser fees (ETFs have lower fees than mutual funds; neither is directly related to adviser fees), toxic assets, CMOs, balloon mortgages and possibly management fees and carried interest. These are related concepts inasmuch as they’re all financial terms.
- Joel_Mckay 2y agoYou seem confused by my frustration with tools towing the company line rather than providing reliable investment advice. Personally, I prefer retaining the option to sue people that pull stunts. But to each their own... =3
- 2y ago
- throwaway2037 2y agoDo 401k plans allow people to buy single stocks? I never saw it in my experience. I cannot believe that would be considered "prudent" by financial regulators. However, when you leave a company you can "roll-over" your 401k into an IRA, then you can go wild and buy anything that you want (IBRK allows it).
- bdangubic 2y agoi401k’s which you have to manage yourself if you are a contractor allow you to purchase whatever you want depending on where your account is. I was with Vanguard and they do not allow it - I moved my account to etrade and now my 401k account is basically like my brokerage account, I can buy whatever I want.