Monday: Sign of the Times

I found this little ditty from Reuters a couple of days ago.  Forget the debt ceiling, it’s the equities market you need to worry about:

NEW YORK, May 15 (Reuters) – The big money is calling a halt to the surge in stock prices. Declines in oil and metals prices are being seen by an increasing number of fund managers and strategists as a signal to get out of riskier areas of the equity market. And that means avoiding things like Chinese IPOs and sticking to the boring stuff, like utilities. The growing concern is that stocks had priced in an overly optimistic economic path, and the recent breakdown in commodities and shift in equities to safer industries such as health care, suggest a reckoning in coming months. Ken Fisher, founder of Fisher Investments that manages about $38 billion in equities. is among those concerned many investors have become overconfident. “I think expectations for the stock market are a bit on the high side,” he said.

Hmmm, you mean that I should lower my expectations of spectacular returns and should maybe settle for the same kind of return I might have gotten with a much more secure pension?  You mean we were right to think that we couldn’t get “Money for nothing and our chicks for free?”  And I wasn’t given a choice because…?

Now, I will be the first to admit that I know very little to nothing about how finance works.  It’s not my fault that I was forced into a 401K.  What I usually do is mix up my investments, set the autobalance option to “on” and leave the sucker alone.  In fact, my BFF probably knows more about my investments than I do.  I’ve done pretty well in the past 8 years but still don’t have anything near the level of savings I need to retire on.

Even so, it’s all at risk right now.  My 401K options didn’t include a mattress to stuff my money under.  All of my options carry an element of risk, some less than others, but most of it tied to the machinations of the money addled financiers.  And WHY are we invested in this market?  Well, as the nice 401K man explained to us when he came to visit the facility last year, pensions are going the way of the dinosaur, “yours aren’t going to cover your expenses”, and “social security is gone for most of the people in this room”.  Gee, who died and made him the US government?  In other words, where else you gonna go, you stupid born in the latter half of the 20th century schlepps?

But note what these guys are saying now that they’ve got everyone invested:

Ken Fisher, founder of Fisher Investments that manages about $38 billion in equities. is among those concerned many investors have become overconfident. “I think expectations for the stock market are a bit on the high side,” he said.

Wait!  Weren’t we supposed to put all of our retirement funds into the market and watch them grow over time so that when we retired, there would be this ginormous fund of cash on which we would pay low as dirt taxes?  Wasn’t that how it was supposed to work?  That’s how it was advertised.  So, now we are being told NOT to expect a hefty return on our investment?  And what exactly is an expectation that is a bit on the high side?  I thought the sky’s the limit.  Surely, I would fare better than my widowed mother on social security, with two pensions, a paid off house, socialized health care and who has never had to choose a mutual fund in her entire life.  I could take TWO cruises per year, right?

No?

I’m not surprised that a whole generation of workers is about to get the biggest shock of its life.  The numbers never did add up for us.  It doesn’t surprise me that it’s coming as soon as it is.  My estimate was 2013, more or less.  We who straddle the baby boom/Gen X era were always going to get the shaft.  The older babyboomers were going to take their big cut of 401K profits, as is their right as firstborns, and send us the hand-me-downs.  Those of us straddlers who are no where near retirement age will have to stand by helplessly as our 401Ks and pensions are sucked dry by the huge generation that precedes us. The finance guys are furiously doing their jobs, trying to track down places where the money can grow to replace the money that is siphoned away.  But they are running out of options and they are now realizing that they must lower our expectations.  Well, they kept *telling* us there was no guarantee of a big payoff, didn’t they?  Weren’t we paying attention when they told us that??  They said our money *could* grow to stratospheric amounts, not that it *would* grow like that.  If we didn’t choose wisely, like choosing to delay our births to around 1960, that’s hardly *their* fault, is it?

Even the Chinese IPOs are not looking so shiny anymore.  Could the rumor that Chinese chemists are demanding 40% more in salary over last year be related to that?  Hey, just because American chemists were like lambs to the slaughter doesn’t mean Chinese chemists have to have a death wish.  So, China is getting smart.  (Worldwide, it turns out that there just aren’t that many of us research types after all)

Yes, the finance guys are getting desperate.  They are finding fewer places to turn a profit, the profit margins are getting skimpier, the babyboomers are removing their cash and they need to get more younger workers into the market.  The base of the pyramid is starting to thin.  Maybe that accounts for all the attacks against the unions and the business plans of Republican run municipal governments to create two tier retirement plans, which now look like thinly disguised theft of younger workers.  All of their money will be put in 401Ks, they will have no access to pensions and by the time they need to access the 401K’s, there will be nothing left or what is left will be growing slowly, if at all, as it is siphoned away by the retiring babyboomers.  The icing on the cake is that some of these municipal workers will be taken out of the social security system as well.  That means there really is nowhere else for them to go but the 401K, the losing proposition.

What does surprise me is that no one seems to be particularly concerned.  We straddler numbers are huge.  We had the biggest graduating classes.  Our wages are being shredded right now, our futures ripped up.  If we’re lucky, we’ll have a bit of money from social security, a bit left over from our ravaged 401Ks and *maybe* a teensy bit of a pension, provided the company that is funding it doesn’t file for bankruptcy and dismantles it (a very real possibility considering who ended up owning my biggest pension fund right now).

Obama is part of this generation.  He seems blithely unconcerned.  Well, what do we want HIM to do about it?

Exactly.  That’s why I voted for the girl.