Have you noticed how paranoid people are getting about market “volatility”.
OMG, cries the DOL, we’re going to fine employers if their 401k plan participants don’t grow their balances as fast as the average plan around the country… thus making the Federal Government a participant in roughly half the 401k plans in every audit time frame.
Employers use investment plans (401ks) as an employee retention benefit… but by what stretch of the imagination are employers responsible for the financial ignorance/naiveté/ laziness/poor judgment of their employees?
Isn’t this just another overreach by regulators who seem focused on making it as hard as possible for private businesses to remain viable? Why not require unbiased investment education instead and create some productive jobs for a change… most adults are willing to accept responsibility for their own mistakes.
Since the dawn of investment time, market value change has been the lifeblood of investing and speculating… a distinction that “Modern Portfolio Theory” (itself a long-con of great imagination) has hypothetically correlated out of existence.
Without market volatility , there would be no chance of profit and no risk of loss. The absurd “Major Prediction Theater” proposes that past correlations and relationships will be repeated in the future, and that risk can be minimized by gaming with the numbers….
The investor need only select the right mix of speculations. But even if the mumbo jumbo is solid, theoretically, market value volatility remains the reality, and some funds, products, methodologies, and hypotheses outperform others… it’s the performance parameters that require adjusting, not the employer’s fiduciary responsibility.
So instead of relying on Wall Street’s most self-serving hypothesis ever, why not embrace the investment god’s gift of market volatility… as many of us have done effectively since investment puberty?
Regulators only appear to be stupid… they know that neither employers nor employees have the inclination to become proficient investors. They know that businesses fear the pox of a compliance audit… making compliance job designations the fastest growing, non-productive, industry in the economy.
And here’s the kind of decision-making the regulatory Gestapo produce:
“Mr. Jones, we’re fining you a gazillion dollars because your retired participants’ 401ks grew only 2% over the last 3 years and the markets were up 15%; clearly you failed in your fiduciary responsibility”.
“But these people are retired, your lordship.”
Their portfolios are producing over 6% in spending money, less insane federal income taxes (light bulb moment: think how a no tax on retirement income rule would benefit everyone), while the best of the best Target Date Funds pay around 2% before taxes .”
“Not my problem sucker, since when did income become the objective of a retirement program”.