Home | About | Donate

New Labor Department Guidance Allows Risky Private Equity Investments in Workers' 401(k) Accounts

Originally published at http://www.commondreams.org/views/2020/06/07/new-labor-department-guidance-allows-risky-private-equity-investments-workers-401k

5 Likes

“Snake Oil, get your Snake Oil here! Cures all that ails you!”

Bottom feeding suck-it-up-to-the-top evildoers must be beaten down at every turn, but it is always going to be a game of whack-a-mole.

5 Likes

Give people maximum choice to invest. If you’re willing to accept higher risk for higher returns, why not allow it?

1 Like

It because as Chile has shown, those funds are used by the Money Managers to favor a very small segment of their clientele.

What they do is use the monies to pump the value of certain stocks held in great numbers by a small group of investors using the liquidity provided by the 401k pool , allow those big players to exit, selling at profit , and then dump the stock.

The example of Chile bears this out. They keep taking about the “average rate of return” or “average monthly pension” received by persons in retirement when the reality is one small group makes a huge return while the masses get next to nothing. Chileans are finding their pensions are no where near as advertised.

2 Likes

What more proof is needed that the greedy b@stards want it all. If you have a 401k, you might want to empty it before they do.

1 Like

If their risk fails like the large Wall Street investorS will they be bailed out also?

In a 401(k), the individual chooses where to invest their money. If they don’t want to put it into a private equity fund, there is no obligation to do so. If they choose to incur the risk, they can do so.

@nineteen50 Wall Street shouldn’t have been bailed out. If you invest, you should take your own risks - When we insulate Wall Street from risk, we encourage even worse behavior.

Let people make their own decisions

2 Likes

Ah yes, lemon socialism, the only socialism conservatives believe in. Privatized profits and socialized losses. “Maximum choice” is likely to end in maximum loss. So why, pray tell, would one not go for broke if the government is standing by to bail everyone out in the event of catastrophic losses, eh?

1 Like

If the people can decide where they want the money invested in a 401k plan then there no need for any changes so as to allow those money managers to get a hold of these funds now is there?

The people act on the recommendation of their brokers who are managing the money. Even the filthy rich rely on the advice of their money managers. The filthy rich have ample leisure time and can afford to micro manage yet still rely on their brokers and you want the people who might be working 60 hours a day to constantly watch over what their broker is doing?

I have worked inside of brokerage agencies and know exactly how these people work. They call up clients and make “recommendations” . When you are trained as a welder and are working some 12 hour shifts in the remote part of Alaska and you call your broker to discuss this pool of money and he says "I got this real hot stock XXXX and recommend you buy, what do you think that welder will do?

The stock market is a great con. A person I worked with who worked in New York for a money manager and quit in disgust indicated that most of the people on the Net that write articles as to what stock to invest in are in on the con, getting a cut to promote a specific stock.

Brokers and money managers were promoting stocks like World Comm and Enron and Bre-x to clients and recommending them as “buys”. This guys are supposed to be trained to do research on the same before investment and your best advice is that the individual investor research those stocks instead?

Lynn, what part of “Wall Street shouldn’t have been bailed out” don’t you understand? You’re welcome to assume the risk you’re comfortable with, as long as you assume the loss as well.

Suspira, under current rules, there are limits as to what you can choose to invest in. More choice is better than less choice, no?

If you don’t want to invest in something, you aren’t required to - you can invest in fixed income, money markets or bonds if you choose. Anyone who thinks a sales person has their interests at heart is begging to lose money. Personally, the stock market has done well by me, but then I only invest in things I research and understand. And I don’t trust brokers.

1 Like

Yes, it shouldn’t have but it was. That’s the issue, the 2008 crash set a precedent. As far as bailouts are concerned, Wall Street takes priority over Main Street.

One more time. Why do they need to change the rules?

Because the current rules prohibit investment in private equity funds

1 Like

I don’t disagree - the current policy is wrong. We should never have bailed them out. And precedents can be changed

1 Like

My own experience: I had much of an IRA portfolio invested in ‘sustainable’ and ‘green’ funds (can’t remember the exact name of them but you get the drift). Had it that way for years on the advice of my father, brother, and others that I respected. Was too busy in life to do my own research.

When I was less busy, I found out that these ‘green and good’ funds were heavily invested in CocoCola, Nike, fossil fuels, and wait for it…Monsanto!

You don’t think that the funds that IRA investors choose won’t siphon off a bit to the PE funds, even though the people didn’t expressly choose them? Do tell me that CDers are not that naive.

The game is rigged - and only in favour of the upper middle class and above. Chile is an excellent example.

No, do not empty.
Move to more conservative investments.
Watch out for dot com bubbles.

Doesn’t affect me, but proceed at your own risk. Also remember how the WS Banks bribed the rating bureaus to rate crap investments as AAA, suckering pension fund managers to invest in them and lose big in the 08-09 crash. My state’s retirement system lost 18% of it’s value to this scam. I expect to see the same type of fraud, once they get their grubby hands on those accounts.

2 Likes

08/09
and where was the claw back?
Prosecutions for SEC violations?
More fraud = yes.
That is NYC wall street and banks.
The stock price index based on future profits of some large corporations, banks, trading firms.

become a nation of finance, insurance, peoples.

want prosperity?
educate 60,000 more engineers and you will have 30 years upward growth.

1 Like

June 7, 2020
The Great American Housing Bubble

posted by Adam Levitin

My new book, [ The Great American Housing Bubble: What Went Wrong and How We Can Protect Ourselves in the Future ]Great-American-Housing-Bubble-Ourselves/dp/0674979656) is being released on Tuesday by Harvard University Press. The book is co-authored with my long-time collaborator, Wharton real estate economist [Susan Wachter It’s the culmination of over a decade’s worth of work on housing finance that began in the scramble of fall 2008 to come up with ways of assisting hard-pressed homeowners.

In the book we present a full-throated argument in favor of homeownership. Since the 2008 crisis, the policy goal of promoting homeownership has been subjected to much criticism, often misguided. While homeownership isn’t for everyone, homeownership has numerous individual and societal benefits, including some that are not generally appreciated, particularly that it serves as a hedge against being priced out of a community because of gentrification. Homeownership is key to community stability, which produces all sorts of social benefits.

h-ttps://www.creditslips.org/creditslips/2020/06/the-great-american-housing-bubble.html

1 Like