this post was submitted on 14 Dec 2023
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[–] aseriesoftubes 162 points 1 year ago (6 children)

The stock market isn’t the economy, at least as most Americans experience it, though it is the same metric that Trump and his followers used to show how “strong” the economy was during his term.

If I had a nickel for every time some Trump apologist said “sure, Trump’s a jerk, but how’s your 401(k)?” during 2017-2021, I’d have… a lot of nickels.

[–] SinningStromgald 60 points 1 year ago (3 children)

“sure, Trump’s a jerk, but how’s your 401(k)?”

Total shit like always. 401ks are poor substitutes for pensions or ya know social security that's actually worth something, since I don't think it will exist when I can retire.

[–] silverbax 11 points 1 year ago* (last edited 1 year ago) (3 children)

401Ks, in general, are a terrible substitute for pensions and social security. The GOP wanted to push Americans' retirement funds into the stock market, and they did that with 401Ks.

I ran some basic analysis a few weeks ago, and even with the corporate matching on 401Ks, due to the poor fund investment options available in most 401Ks, they underperformed index funds over a 30 year period.

Yes, that means many people who contributed to their 401K at full amount, even with matching, have less money than someone who just invested in SPY or VOO over the same period.

[–] [email protected] 16 points 1 year ago (1 children)

Financial vehicles for retirement should be relatively low risk, with that risk becoming even lower as you reach retirement age. Investing in a single stock, no matter what it is, is a high risk. Sure, you can look into the past and say "if you'd just invested in Stock X," but that's with the benefit of hindsight.

The only way you should be managing your 401K is into an index fund with low fees. That's it. Everything else is gambling.

[–] EatYouWell 6 points 1 year ago

Yup. If your 401k is consistently losing money, then you have it in the wrong investments. You should be seeing an average return of ~7%.

[–] [email protected] 7 points 1 year ago (2 children)

confused by your comment because my 401k contributions go directly towards index funds. are you talking specifically about target date funds, or something else?

[–] [email protected] 13 points 1 year ago

It's laughably obviously that this individual has zero experience with individual retirement accounts and is, in fact, making up this alleged analysis. There is no way they even have access to such data.

Target year funds will almost always underperform SPY, by design. They are broad market funds which taper into bonds over time. Either way, I have never seen a 401k which doesn't have many, many index tracking options.

[–] [email protected] 3 points 1 year ago

Most 401ks these days have very few restrictions on how they can be invested. And you can always roll them into an IRA with basically no restrictions. You can literally day trade options on margin in most IRAs.

[–] [email protected] 9 points 1 year ago (1 children)

Yeah, but now the upper and middle classes future are dependent on stonks go up. Who would have guessed that all it took to disrupt class solidarity between the lower and middle class was just a little gambling?

[–] CharlesDarwin 6 points 1 year ago (3 children)

Also, there are all those management fees to be made....I'm surprised the 401K is even legal at this point. Imagine setting up a structure where huge amounts of guaranteed profits are given to an industry:

All told, the Center for American Progress estimates that a typical worker -- earning the median income and paying the average 401(k) fees over their lifetime -- will be assessed a total of $138,336 in fees. And the cost is much more severe for high-income workers, who, assuming a starting salary of $75,000 at age 25, are projected to pay an estimated $340,147 over their lifetimes, thanks to the fee structure of the average 401(k) plan.

[–] [email protected] 3 points 1 year ago

Why would that surprise you? It's the kind of policy Republicans absolutely love, and which most elected Democrats are perfectly willing to tolerate.

[–] [email protected] 1 points 1 year ago

This is no different from a pension though. Those were typically managed funds as well.

[–] Blue_Morpho 1 points 1 year ago (1 children)

That's on them for falling for the " money managers know what they are doing" scam.

I fell for it for 10 years. Now it's direct stock ownsership and etf's. The founder of Vanguard started his fund because he knew the scam.

Everyone thinks they have a young Warren Buffett running their investments when really it's used car salesmen getting kickbacks for investing your money in bad funds. Obama made that illegal but if course Trump made it legal again.

[–] [email protected] 2 points 1 year ago (1 children)

Sounds like victim blaming to me. Scams should not be legal or tolerated, and most especially, nobody should be allowed to profit from running a scam.

[–] Blue_Morpho 1 points 1 year ago* (last edited 1 year ago) (1 children)

Is Vegas a scam? You know the odds. Funds publish their returns and their charges. The commissions on bad investments should be illegal and once were.

[–] [email protected] 2 points 1 year ago

Do Vegas casinos party money to promote the idea that gambling there is an investment?

Your analogy sucks. Everyone knows gambling is for entertainment.

[–] [email protected] 2 points 1 year ago (1 children)

This depends greatly on circumstances. In many cases a 401k will be worth significantly more than the equivalent pension (in my father's case, his pension buyout was worth double ten years later), and there's no risk of bankruptcy rendering your 401k insolvent. Likewise, many jobs which would have never come with a pension have 401k matching these days.

The downside is obviously that it rides the stock market, but you can make the argument that this actually makes the collective global economy our pension. It's gives more people a stake in that stability and growth, for better or worse.

[–] [email protected] 2 points 1 year ago (1 children)

In many cases betting at a casino has a higher ROI than any actual investment. Still doesn't mean it's a good idea to bet your life savings at a casino.

[–] [email protected] 1 points 1 year ago (1 children)

Betting on the S&P 500 is way less risky than betting at a casino, especially in the long-term. You are betting on the growth of the global economy, not betting on whether the casino wants to give you money.

[–] [email protected] 1 points 1 year ago (1 children)

Good thing people only put their money in the S&P 500.

[–] [email protected] 1 points 1 year ago

If you want to criticize fund managers or lack of regulations for pushing people towards risky picks like individual stocks, then fine. That doesn't mean that 401(k)s and 403(b)s are bad tools.

Either way, the "casino" argument falls flat because an informed person can control the risk they undergo.

[–] captainlezbian 28 points 1 year ago (3 children)

True, but also the economy was plummeting for years. I can’t think of a year Joe Biden was president that we weren’t expecting a recession by the end of it. Right now we’re looking at improvement next year. That’s what Biden’s economy is. He played a bad hand really well and we’re consistently doing better than countries with right wing leadership have been since the pandemic.

[–] EatYouWell 10 points 1 year ago (1 children)

It's just the cycle. Dems get the economy healthy, then a republican comes in and trashes everything and leaves a mess for the next dem in office to fix.

The policy changes always take some time to fuck things up, so it usually happens after the republican gets ousted.

[–] Wrench 9 points 1 year ago (1 children)

I mean, the housing market is fucked for the foreseeable future because the Trump administration kept interest rates ridiculously low, well after we had recovered from the 2008 crash.

This made a bubble from businesses and individuals borrowing as much "free money" as they could because it was easy to beat the interest, even from low performing investments. Obviously, a lot of this money ended up in the real estate market, inflating the shit out of it. Then the pandemic happened, and everyone was stuck at home, wanting to upgrade, and bam, crazy inflation.

So now we're rather fucked. Prices aren't coming down because people are locked into their stupidly low interest rates and can't sell without taking a huge hit.

Big surprise that existing real estate owners saw their properties double as a direct result of economic policy, dictated by a real estate tycoon president.

[–] banneryear1868 0 points 1 year ago* (last edited 1 year ago)

The US since it's inception has basically been an experiment in free real estate.

[–] banneryear1868 2 points 1 year ago* (last edited 1 year ago)

The active president doesn't really have as much control over the economy as people think, Trump's tariffs are still in place and wholly supported by Biden as well to the chagrin of the WTO. People's perception of the economy absolutely changes with the active president, to the point that people will feel more financially secure the day after the president they support wins the election and isn't even sworn in to office yet. The overarching neoliberal capitalist economy is consented to by both major parties and is "right" leaning if we're talking pure economic political spectrum. Democrats just believe in more tax incentives and inclusion, Republicans are more ruthless. I guess the main point I'm making is the "Trump" or "Biden" economy isn't real, what they effectively have are dials that fine tune secondary parameters of the economy.

World events out of their control or financial sector behaviors (like mortgage-backed securities and collateralized debt obligations) are the "real" drivers and the government under either party is generally reactive. Biden is basically doing "good" things under this system that don't upset it but have small noticeable improvements. So while it's good to point this out it's also important to realize these aren't unprecedented or majorly new things and likely won't alter our default economic arrangement and social contract, which is still being degraded as the neoliberal capitalist system degrades.

[–] MindSkipperBro12 0 points 1 year ago

Economists and everyone else ALWAYS keep crying about a recession.

[–] [email protected] 20 points 1 year ago* (last edited 1 year ago)

“sure, Trump’s a jerk, but how’s your 401(k)?”

Or as I like to paraphrase, "My morality is for sale"

[–] [email protected] 7 points 1 year ago

It's only a "depression" when the ownership class is affected.

[–] SkybreakerEngineer 2 points 1 year ago

Classic "screw the rules, I have money" mentality