Are you, a member of your immediate family, or a close friend one of
the millions he is talking about? If so, can you describe how you were
forced to invest, how much you were forced to invest (not a
confidential dollar amount, but just a general description)?

Another thesis of this poster is that many of those being forced to
invest in the stock market are not being given any choice about what
they invest in. If you are one of those who is being forced to invest,
is this true as well? How have your choices been limited?

Fred

The motivation comes about from the near-extinction of defined-benefit
pension plans and their replacement by defined-contribution 401(k)
plans.  Several studies (cf. "Smart Money" magazine) have shown that in
order for a 401(k) plan to provide retirement income comparable to what
defined-benefit pension plans used to provide, it *must* be invested in
the stock market, and in fact must be invested aggressively.  Neither
cash instruments nor bonds will generate a sufficiently high return.

That's not surprising, because the old defined-benefit pension plans
*did* invest their assets in the stock market, and the high returns were
what enabled those plans to meet their obligations to retirees.

The difference is that defined-benefit pension plans *pooled* the
contributions of numerous employees (thousands of employees for a large
corporation), enabling the invested pool to be more aggressive and yet
ride through market fluctuations.  It's more difficult for an individual
investor with a 401(k) plan to ride through a 48% decline in the S&P
500, as happened in 2000-2002.

Some 401(k) plans offer bond funds and other investment choices too.
Only a relative few 401(k) plans offer any chance to invest in
commodities or other hard assets, which may present limitations if
inflation continues to pick up.

However, until the Enron debacle, the matching contributions made by the
employer on behalf of the employee were often required to be invested in
company stock.  Numerous employees of Enron lost their life savings when
the Enron stock in their 401(k) plans became worthless.  Ever since,
401(k) plans have gradually been moving away from forcing employees to
invest in company stock, though some still require it.

The headmasters of the FRAUD that is the stock market.  None of this
shit is worth 10 cents on the dollar.

More like $5 TRILLION.

Understand what this fraudulent rally is:  It's a recognition that the
government will keep "printing" dollars until we have a wheelbarrow-
ful apiece.

The warden at the San Quentin Hilton gave Bill Reid an early parole.  He grabbed
a Saturday night special, pointed it to my head and ordered that I buy a billion
shares of GCOG.

Just kidding, Bill.

BTW, did I ever tell you the joke about the jailhouse lawyer who thought he was
a Ferrari mechanic?

-- Lubow.

There is no question of being forced into investing in the stock
market or any other market for that matter.  All individuals come to
these markets willingly, and this number goes into millions of persons
across the globe.

We may consider segregating this large investor base into various
types; like old hand and newbies, investors and speculator, passive
investors and active investors.  So, it takes all kinds and types to
make up this large population group.  Anfd there is nothing wrong with
the ESOPs as after a period of time the employee can encash them for a
profit anyways.

Happy investing,

Akash
http://www.narachinvestment.com

On Jul 24, 5:56 am, alexy <nos...@asbry.net> wrote:

July 25, 2008

How Wall Street Wrecked Your Retirement

By Nicholas von Hoffman

People are discovering they have been forced into a system in which
others have gambled with their retirement savings and lost it.

Our disfunctional financial system hit a new low last week when
Citigroup, the hopeless wreck of Wall Street, announced it had lost
$2.5 billion in the past three months -- a cheer went up, and so did
the Dow.
http://online.wsj.com/article/SB121636319957764985.html?mod=%20todays...

Only $2.5 billion; people were afraid the losses would be much higher.
Happy days are here again.

There are no happy days for the millions of Americans who have been
trying to put away some money for their retirement in tax-sheltered
entities like IRAs, Roth Accounts and 401(k)s.

For them, the market's downward slope has been harrowing and
frightening.

When will the steady erosion of their savings end?

And when it does, what will be left of their future financial
security?

Many of the millions suffering through these worrisome months didn't
buy a house they could not afford, didn't speculate on their homes,
didn't let greedy impulses lead them to the edge of foreclosure or
bankruptcy.

Nevertheless, the excesses of their neighbors and the criminal folly
of American finance is destroying their plans for retirement.

It is dragging down much of the value of their homes, on which they
have never missed a payment, homes on which they were counting on
selling at retirement to help finance their last years in comfort.

For years, the privatization propagandists have been telling people
that when the time comes, Social Security will not be there for them.

Now many are learning that it's their private savings that may not be
there.

They are discovering they have been forced into a system in which
other people have, in effect, been allowed to gamble with their
retirement savings and have lost it.

The way the private, you're-on-your-own retirement system was supposed
to work had individuals, during their younger, working years,
investing in stock through tax-sheltered accounts.

Almost nobody who is not breaking the law can choose among individual
stocks and make money, so future retirees have been encouraged to buy
mutual funds run by professional managers, who are supposed to be able
to pick the winners.

Most of them aren't much better at doing that than are their
customers, but in a rising market, a chicken pecking at stock tables
can pick winners.

In boom times, it doesn't matter that the future retiree must choose
among thousands of mutual funds, many of which carry ruinously high
fees.

The damage to people's savings goes unnoticed until the market begins
to go down.

Even as the market falls, future retirees are told not to panic, to
keep their money where it is, because in the long run the value of
their accounts will go up and they will have many a happy sunset year
traveling the globe and showering their grandchildren with presents.

As the retirement date comes near, they are advised to begin selling
stocks and buying fixed-income securities -- as bonds are sometimes
called -- because these pay the interest they earn on a fixed
schedule, providing a regular income.

For this to work, stock prices must be high when the holdings are sold
and the bonds purchased must pay high rates of interest.

But what happens when the stock market is in a nosedive and interest
rates are half of the inflation rate, as is the case right now?

Panic and worry, no golden years of travel, no presents for the
grandchildren.

The energy that was to be expended on leisure activities is spent
instead trying to figure out how to make ends meet.

The bright spot is Social Security.

That check does come with the regularity of the calendar, whether the
market is up or down, whether interest rates be high or low and if, as
is the case now, the Greenspan-Bush inflation is destroying family
budgets.

Social Security adjusts for the rising prices.

But Social Security is too narrow a ledge to stand on through the
years between retirement and death.

It was designed as the base on which other retirement savings were to
be built.

Those savings -- the house and the tax-sheltered retirement accounts
-- are shriveling up and blowing away.

The persons for whom Americans' savings have been a reliable source of
income are the brokers, the lawyers, the account administrators, the
whole tribe of Wall Street fee farmers.

They get other people's retirement money regardless of the direction
the market may be moving in.

You can't call it a broken system because it was a bad one from the
start.

It is failing, just as its critics said it would.

And what lies ahead for those whose retirement savings are gone may be
a very unpleasant old age.

__________________________________________________

"I shall not know until the end what I have lost or won in this place,
in this vast gambling den...."

But more importantly, I think that advice to invest more aggressively
to get a DC plan to perform like a DB plan is dangerous and in many
cases futile advice. The structural differences between DB and DC
plans go WAY beyond how they are invested. Starting earlier and saving
more are two changes that make much more difference that the extra
return that can be gotten thorough increased performance of a stock
fund. And such an article may encourage someone near retirement (and
let's face it--those are the people who are more likely to relate to
the article) to over commit to stocks at the very time that they
should be moving to more stable investments. Stocks are by far the
smartest way to invest for someone in their 20s, 30s, or 40s (as long
as they have sufficient other reserves for short-term contingencies).
But it's not something to sink your money in if you might need it all
relatively short-term.

Well, after a little more than a week, the count as I have it is:
People reporting having been forced into the market: 0
People reporting family members having been forced into the market: 0
People reporting close friends having been forced into the market: 0
People claiming that by repeating his words I am distorting them
(since after all, I should know he never means what he says or says
what he means, so repeating what he says is a clear distortion of what
he means): 1
Claims that no-one is forced: 3
Claims that anyone in a pension is forced: 2
Claims that government investment constitutes individual
stock-holding: 2
Thoughtful response about reasons for increased shareholding: 1
(Thanks, Steven L. Will reply to your post separately.)

 i am sick of your distortions, quibbles, attempts at distractions,
and out right lying by putting words into my mouth.

http://www.salon.com/tech/feature/2002/01/17/401k/print.html


To print this page, select "Print" from the File menu of your browser

401 reasons to love Enron
Employees of the energy trader are furious at the loss of their life
savings, but the debacle could finally be the catalyst for long-needed
retirement fund reform.
By Damien Cave
Jan. 17, 2002 | When Enron filed for bankruptcy in December, thousands
of employees lost not just their jobs but also the money set aside for
their retirement. Utility workers, midlevel managers and others who
invested in Enron stock via the energy trader's 401K savings plan lost
an estimated $1.3 billion.
In all, "about 18,000 to 20,000 employees lost money because their
retirement accounts were invested in Enron stock," says Karl Barth, an
attorney for Hagens and Berman, a Seattle law firm that's suing the
energy trader on behalf of the employees. Chances for quick recovery
appear nonexistent; the lawsuits won't be completed for years,
corporate bankruptcy filings typically send shareholders to the back
of the creditors line and, on Jan. 15, the New York Stock Exchange
delisted Enron's stock.
The plight of Enron's employees, in contrast to widely reported
stories of top Enron executives cashing out for millions of dollars
over the past few years, has made Enron's 401K plan a hot political
topic. President Bush, Treasury Secretary Paul O'Neill and several
members of Congress have called in recent weeks for an investigation
-- "to make sure that people are not exposed to losing their life
savings as a result of a bankruptcy," as Bush put it.
Barth aims to hold Enron accountable. The design of Enron's 401K
savings plan, he says, contributed substantially to employee losses.
Enron limited employees' investment freedom from the start by matching
their contributions only with company stock and by preventing
employees from selling that stock until age 50.

KINDA LOOKS FORCED TO ME!!!!!!!!!!!!!

And just as Enron's problems began to escalate into public view, Enron
chose to change administrators of its 401K plan. During the period in
which information about the plan's accounts was being transferred from
one administrator to another, employees were locked into the 401K
decisions that they had already made.

KINDA LOOKS FORCED TO ME!!!!!!!!!!!!!

The timing could not have been worse. The decision to change
administrators came just before Enron released information about its
business that was bound to depress its stock price further.
There's some dispute about the length of the lockdown -- Enron says it
lasted from Oct. 29 to Nov. 13; employees claim they couldn't make
changes between Oct. 17 and Nov. 19 -- but what's clear is that
employees were unable to shift their investments away from Enron stock
as its price tumbled ever lower. Specifically, on Nov. 8, when the
company restated its earnings from 1997 to 2001, employees who had
Enron stock in their retirement accounts could not sell. They had to
hold the stock, which was then falling below $9 per share (from a high
of $90 in September 2000), until at least Nov. 12, according to Enron,
and Nov. 19, according to Hagens and Berman's complaint.

KINDA LOOKS FORCED TO ME!!!!!!!!!!!!!

The employees most at risk were those who had expressed the most faith
in Enron by putting their own contributions into Enron stock.
Meanwhile, says Barth, some Enron executives reportedly were enrolled
in a different retirement plan that did let them dump their shares.
Executive-selling disclosures for October and November have not yet
been released. So it is impossible to know how many executives took
advantage of their opportunity. But the mere existence of the loophole
has employees crying foul.
While Enron certainly lived at the cutting edge in many of its
financial operations, the way its 401K plan was structured was not
exceptional -- on the contrary, it was typical.

 yep, it was common. and still is.

 If there's any silver lining to the Enron mess, it may be that the
high profile of Enron's implosion may finally focus long overdue
scrutiny on how contemporary pension plans and retirement funds work.
The timing of Enron's 401K lockdown raises a host of questions about
Enron's intentions, but the larger story of how the company's 401K
plan was set up is far from unique. The days of guaranteed, or
"defined" benefits -- you get out what you pay in -- were over long
before Enron collapsed. Today, so-called defined-contribution plans,
in which the payoff depends on how your investments play out, can be
found at nearly every sizable company.
In large public companies, it's also common for employees to have the
vast majority of their money tied up in their employer's stock.
Enron's employees had about 60 percent of their assets in Enron stock,
but that's far from the extreme. Procter & Gamble's workers keep about
94 percent of their 401K money in P&G stock, according to a recent
survey. Employees of the Sherwin-Williams paint company keep 90
percent of their plan's assets in company stock; at Coca-Cola, more
than 81 percent of 401K assets sit in the soft-drink company's paper.
As any financial planner will tell you, undiversified investment is
risky, but for many Enron employees -- like the workers at Lucent,
Ikon Office Solutions and other companies that are being sued by their
401K holders -- the danger wasn't recognized until it was too late.

 because it looks  like they were forced.

"There's a tremendous amount of inertia with 401Ks," says Brigette
Madrian, a professor at the University of Chicago business school. "By
the time the lockdown started, Enron's stock had fallen by a lot, at
least two-thirds, so you'd think that people would have gotten out,
but they didn't. They still had 60 percent of their assets in company
stock."
Which raises the question: Do 401K investors need to be protected from
themselves more than their companies?
The question never even occurred to Ted Benna, who first came up with
the design of today's 401K about 20 years ago. He figured that
creating a framework of pre-tax contributions, matched by employers,
would encourage people to save for the future. In 1981, the IRS
approved Benna's plan. But the veteran financial planner never
expected 401Ks to take off, nor did he imagine that people would tie
up most of their savings in a single company's stock.

 even the inventor was clueless, so how could he expect the average
person to know, when experts did not know either. your arguments are
very weak, based on assumptions of hindsight, maximum wage earning,
even when you are young, and perfection. your averages include all,
even the losers, what a joke.

"The problems of today weren't an issue 20 years ago because investing
wasn't that big a deal," he says.
Defined benefit programs had dominated the retirement field for
decades. In combination with regulations that precluded employers from
investing more than 10 percent of the assets in any one entity, they
were safe, predictable savings tools.
"In the old days, you knew what you were going to earn at the end of
your life," says Ernest Englander, professor of business and public
policy at George Washington University. "But in the '80s and '90s, we
moved to defined contributions, not benefits."
Along the way, companies started exerting more influence over the
retirement investments. Specifically, "Many companies set up rules so
you had to put the money into your own company," Englander says.

FORCED!!!!!!!!!!!!! AND IF THEY ARE RETIRING NOW, AFTER BEING FORCED
FOR DECADES, I AM SURE THEY WILL RETIRE IN COMFORT, KNOWING THAT THEY
LOST MONEY, BUT WERE PART OF THE AVERAGE, SNICKER!!!!!!!!!!!!!!

 CEOs wanted people to feel like they had a stake in the company, but
risks came with connection.
They also had another, less honorable motivation. Making contributions
in stock avoided expensive cash payments that could detract from the
company's bottom line.

 FORCED FRAUD!!!!!!!!!!!!!!!!!!!!!!!

"Not only were you not diversified, but there were also restrictions
on when you could take that money out," Englander says. "It made you
be fully invested in your own company: Not only is your income based
on the company, but so too is your retirement."

 FORCED, AND I BET MILLIONS WERE, AND MAYBE STILL ARE INVESTED THAT
WAY.!!!!!!!!!!!!!!!!!!!!

Few employees noticed or cared during the '90s, when the stock market
surged ever upward. As newly minted dot-com millionaires made
headlines, companies in every sector of the economy started
distributing stock, sometimes in lieu of salary. Many employees
welcomed the change. The "I don't want to miss out on a good thing"
mentality ruled, Benna says. It was everywhere. He even remembers
listening to the administrator of General Electric's 401K plan, who
repeatedly told people at conferences, says Benna, "that he was
penalized by following his own advice and that of pros by diversifying
rather than investing his whole account in GE stock like some other
employees did."

 YEP, EVEN THE EXPERTS GET CAUGHT UP IN A FEVERISH BUBBLE, AND LOSE,
BUT HEY, THEY WERE LOSERS WHO WERE PART OF THE AVERAGES, ITS
COMFORTABLE TO KNOW THAT:)

When the stock bubble burst in April 2000, the love affair with stock
largely ended. But the idea of 401K reform remained in the background.
California's Democratic Sen. Barbara Boxer had proposed legislation to
enforce diversification in 1997 but the idea never went anywhere.