Re: tsk tsk, poor alexy/jane:Wall Street lost over 20% of Main Street's 401(k)money between 2000 and 2010. Yes, Wall Street's a big loser the past decade:Given their miserable track record, only a fool would bet with Wall Street

[brad herschel]

On May 25, 12:01 pm, Nickname unavailable <Vide...@tcq.net> wrote:
> tsk tsk, poor alexy/jane:Wall Street lost over 20% of Main Street's
> 401(k)money between 2000 and 2010. Yes, Wall Street's a big loser the
> past decade:Given their miserable track record, only a fool would bet
> with Wall Street
>
> http://finance.yahoo.com/banking-budgeting/article/109632/warning-cra...
>
> Warning: Crash dead ahead. Sell. Get liquid. Now.
> by Paul Elliott, Motley Fool Hidden Gems
> Tuesday, May 25, 2010
> provided by
>
> Commentary: 'Game's in the refrigerator.' Power's turning off. Dow
> sinking below 6,470
> "This game's in the refrigerator! The door's closed, the lights are
> out, the eggs are cooling, the butter's getting hard and the Jell-O is
> jiggling ..."
> That was legendary Lakers' radio announcer Chick Hearn's signature way
> of calling a game early, telling fans the home team won ... you can
> head for the exits before the final buzzer. Chick wrote the book with
> popular sports phrases like "slam dunk," "air ball," "charity stripe,"
> and a "bunny hop in the pea patch" for a traveling violation.
> Chick's our inspiration today: Last March I wrote "6 reasons I'm
> calling a bottom and a new bull." Today it's time for a new call.
> We've had a good year. Net gains over 50% in 2009. But now: "Game
> over, head for the exits." Bears beating bulls.
> No, no, "it's a buying opportunity," says another legend, hedge fund
> manager, Barton Biggs. Buying opportunity? For who? Remember, Biggs
> isn't advising Joe Lunchbox about what to do with his little 401(k).
> Biggs' customers are mega-millionaires in his $1.5 billion Traxis
> Partners Fund. Main Street investors like Joe are prey in his casino.
> Read on, you decide: As you stare from high up in the nose-bleed
> bleachers watching the game, staring at a Dow that not long ago was
> above 11,000 and heading for 12,000. Now the Dow's sitting on the
> bench, ready for the showers, weak after a couple air balls around
> 10,000. No more timeouts. "This game's in the refrigerator."
> How bad is your bookie's point spread in this game? A blowout? Will
> the Dow drop below 9,000 again? Now that it's broken technical
> supports, will it drop below 6,470, where the last bull rally started
> in early 2009? Can you handle the nerve-racking volatility generated
> by Wall Street's high-frequency traders playing the game at warp-speed
> with algorithms making thousands of micro-bets in milliseconds,
> betting billions daily?
> So who should you listen to? Barton and I arrived at Morgan Stanley
> about the same time. He stayed decades longer, became one of the
> world's leading strategists, advising the kind of high-rollers who
> also bet at private tables in a Vegas casino.
> You remember Biggs: In his book "Wealth, War & Wisdom" he advises his
> high rollers to prepare for a "breakdown of the civilized
> infrastructure." Buy a farm: "Your safe haven must be self-sufficient
> and capable of growing some kind of food ... It should be well-stocked
> with seed, fertilizer, canned food, wine, medicine, clothes, etc.
> Think Swiss Family Robinson." Biggs is not advising small investors on
> what to do with their 401(k)s.
> If you're gambling at Wall Street's casino, folks, the odds-makers are
> betting against Biggs. It's "game over."
> Main Street lost 20% last decade ... yet like sheep keep going back
> Yes, if you're channeling Chick, here's your "mixed metaphor" cue
> card: "This game's in the refrigerator ... Wall Street won (proof,
> Goldman's $100-million-profit trading days and Blankfein's $68 million
> bonus) ... Main Street's headed for another losing streak ...
> Congress' lights are out ... the refrigerator door's closing on
> financial reforms ... the lobbyists are laying some rotten eggs,
> poisoning capitalism ... the Tea Party-of-No-No ideologies are
> hardening ... the bull's Jell-O is jiggling to a flat line ... and
> this market's going into hibernation, with the bears ... run, don't
> walk, to the exits, folks."
> But will Main Street exit? Will we ever learn? No. The Wall Street
> casino makes mega-billions for insiders like Blankfein and the Goldman
> Conspiracy. Yet "The Casino" is still below the 2000 record of 11,722.
> So after accounting for inflation, Wall Street lost over 20% of Main
> Street's 401(k) retirement money between 2000 and 2010. Yes, Wall
> Street's a big loser the past decade. Their advice is self-serving.
> Period.
> Given their miserable track record, only a fool would bet with Wall
> Street. Betting odds are Wall Street will lose another 20% in the next
> decade from 2010-2020. Yes, today's market is a "buying opportunity,"
> but only for Wall Street casino insiders like Biggs, Blankfein and
> even low-level staffers inside "The Casino." But not for our 95
> million Main Street investors, there's more pain ahead, this market's
> dropping.
> Correction? New crash imminent, worse than 2008
> More proof: Earlier economist Gary Shilling said price-to-earnings
> ratios are at a "nosebleed 22.5 level." The Dow was around 11,000.
> Money manager Jeremy Grantham recently said the market's overvalued
> 40%. That could mean a collapse to 6,600. Last week in Reuters'
> "Markets Could Be Derailed Again," George Soros echoed a "game over"
> warning with a "stark warning ... that the financial world is on the
> wrong track and that we may be hurtling towards an even bigger boom
> and bust than in the credit crisis."
> Now Dow Theory's Richard Russell is warning the public of an imminent
> crash: "Sell ... get liquid ... by the end of this year they won't
> recognize the country."
>
> A bigger meltdown than the credit crisis? Yes, Bush's team drove
> America into a ditch. But now Obama and his money men, Summers,
> Geithner, Bernanke, are digging the hole deeper. Soros says we have
> not learned "the lessons that markets are inherently unstable." As a
> result, "the success in bailing out the system on the previous
> occasion led to a super-bubble." Now "we are facing a yet larger
> bubble." Worse than 2008?
> Yes, the game may be "in the refrigerator," the lights will go out,
> but as Soros hints, the electricity may get turned off too. Get it?
> This may not be a correction. Not even a bear. What's coming could be
> worse than the 2000 dot-com crash and the 2008 meltdown combined, a
> "Super-Bubble" says Soros. And the biggest reason, Nouriel Roubini and
> Stephen Mihm tell Newsweek, is that "the president's half-measures
> won't fix our failed financial system" because he refuses to "bust up
> the too-big-to-fail banks."
> Yes, Congress will pass something. But unfortunately, as reported on
> MSNBC, Senator Dodd, the reform bill's sponsor, is a turncoat, working
> overtime with Wall Street lobbyists "to weaken financial reform,"
> leave us vulnerable to a new, bigger crash in the near future. And
> Wall Street lobbyists are spending hundreds of millions to kill
> reform.
> 'White Swans:' 2000 and 2008 crashes were predictable, next one too
> Recently Roubini was interviewed by Charlie Rose in BusinessWeek. His
> message confirms the worst. Roubini was questioned about his new book,
> "Crisis Economics." Rose began by asking, "what have we learned from
> these crises of capitalism?" Roubini could easily have said, "nothing,
> we learned nothing." His actual reply:
> "The first lesson is that crises are not 'black swan' events ...
> they're not just random outcomes. They are the result of a buildup of
> financial and policy vulnerability and mistakes -- excessive risk-
> taking, leverage, debt, and so on." They are 'White Swans' "because
> these events are predictable. But generation after generation, we seem
> to forget the past. When there's a bubble, there's euphoria. There's
> irrational exuberance. Consumers can use their homes like ATM
> machines. Governments and policy makers are happy because they get
> reelected. Wall Street makes billions of dollars of profits.
> Everybody's delusional."
> Sound familiar? Yes indeed, in "This Time Is Different: Eight
> Centuries of Financial Folly," economists Carmen Reinhart and Kenneth
> Rogoff pinpoint the key signal that will blow the whistle and call the
> game: The "90% ratio of government debt to GDP is a tipping point in
> economic growth." For 800 years "you increase it over and beyond a
> high threshold, and boom!"
> Warning, fans, the numbers on the game-clock are flashing wildly.
> America's ratio is now 92%, thanks to Obama's $1.7 trillion budget,
> future deficits, exploding debt. Soon, Ka-Booom! Another great nation
> bites the dust. Depression follows. Goodbye retirement.
> Warning: 800 years of history are calling 'game over'
> But can't we change destiny? Or are Dodd, Congress, Obama, Wall
> Street, the Party of No-No and 300 million Americans all just playing
> their parts in a historical script well-known to historians like
> Reinhart and Rogoff, Kevin Phillips, Niall Ferguson and others? The
> message of "This Time Is Different" is very simple:
> "We have been here before. No matter how different the latest
> financial frenzy or crisis always appears, there are usually
> remarkable similarities from past experience from other countries and
> from history. ... no country, irrespective of its global importance,
> appears to be immune to it. The fading memories of borrowers and
> lenders, policy makers and academics, and the public at large do not
> seem to improve over time, so the policy lessons on how to 'avoid' the
> next blow-up are at best limited."
> So please listen closely: All the TARP bailouts, stimulus debt and Fed
> loans won't work. Neither will a new conservative government. This is
> not a basketball game. We are not channeling Chick Hearn, calling this
> game before the final buzzer. While we prefer the illusion that "this
> time really is different," eight centuries of history suggest
> otherwise:
> "The lesson of history, then, is that even as institutions and policy
> makers improve there will always be a temptation to stretch the
> limits. ... If there is one common theme to the vast range of
> crises ... it is that excessive debt accumulation, whether it be by
> the ...
>
> read more »

FYI

brad

[Don Klipstein]

In <d86904ae-52eb-4279...@k31g2000vbu.googlegroups.com>,

brad herschel wrote:
>On May 25, 12:01�pm, Nickname unavailable <Vide...@tcq.net> wrote:
>> tsk tsk, poor alexy/jane:Wall Street lost over 20% of Main Street's
>> 401(k)money between 2000 and 2010. Yes, Wall Street's a big loser the
>> past decade:Given their miserable track record, only a fool would bet
>> with Wall Street

<SNIP from here>

Suppose you bought a portfolio of the S&P 500 stocks at the 1929 high,
and managed it the way the Vanguard "Index 500" fund does, at same expense
ratio. (That mutual fund came into existence after 1929.) Further
suppose that you sold at the 1982 low. Result: Annual rate of return
averaged over that 53 years is about 7% or a bit more.

The 1929-1949 stretch was no picnic, with average annual rate of return
over that stretch barely exceeding zero.

The worst 30 year stretch for the USA's total stock market had average
rate of total return of positive 8.53% according to:

http://www.investingadvisers.com/forum/finance/post-64737.html

The worst 30 year period is 1928 through 1957.

That same source says the worst 46 years was even worse, probably from
including the 1929-1932 downturn and the stagnation of the next few years
and the 1970-1974 downturn. The figure there is 7.32%. That weak 46 year
period is 1929 through 1974.

Since the 1974 to 1982 stretch does not look great, I suspect the
1929-1982 stretch could easily have averaged slightly less than 7.32%.

--
- Don Klipstein (d...@misty.com)