January 24, 2005
MONEY MARKET, BONDS, OR AN S&P 500 FUND?:
Moron-Proofing Social Security (Douglas Kern, 01/24/2005, Tech Central Station)
It's the day after Congress has permitted individual citizens to invest in privately-controlled Social Security accounts, and you've just received a large colorful envelope in the mail, explaining that You May Already be a Winner!
A prospectus of government-approved investment funds? A pamphlet of government investment advice? Wrong. The package is thin, creepily thin. The first sheet looks like a record club promo. "Invest in THREE mutual funds FOR JUST ONE PENNY! Scratch off the gold box to find your SECRET MYSTERY FUND!" Elsewhere, a scantily clad Paris Hilton assures you that real men invest in no-load index funds. Still another handout encourages you to "Cheer on Fidelity Municipal Bond Fund against Fidelity Income Fund in Fund Bowl I -- during the Super Bowl!" Anthropomorphic representations of safe, 8%-a-year investments, battling it out on the gridiron in a contrived set of computer-generated ads!
The fine print allows you to send for a more comprehensive list of government-approved investments -- but the not-so-fine print cajoles readers to invest in low-risk funds using every idiot-friendly tool in the book: small words, pretty girls, goofy gimmicks, babies, and puppy dogs. Everyone loves babies and puppy dogs.
Is it the end of sanity?
No. It's privatized Social Security -- moron-proofed.
The aspect of privatization that conservatives are going to be most upset by--having already been forced to accept that government withholding for retirement is permanent--is just how few choices there are. But that reduces the risk to acceptable levels for a universal program.
Posted by Orrin Judd at January 24, 2005 12:25 PM
How is it TSP's (Thrift Savings Plans) can be accepted as perfectly viable and have more choices than this? Conservatives needn't reinvent the wheel here - just pound the table to model partially privatized SS after TSP's. If that's too risky or not idiot-proof enough, then surely we must abolish the TSP's, no?
What's most painful is to realize that politics makes in impossible to have an enforceable opt-out option.
That's why I've given up fighting. Not paying is not an option.
This isn't moron-proofing so much as self-appointed-genius-proofing. Financial idiots like me tend to suspect as much. That's why we have our life savings in a sock in the nightstand, and our 401(k) in a stable value fund. The ones you have to worry about are guys like I work with: engineers, with a high opinion of their own intelligence, and just enough math to be convinced of their own BS. Back in '98 and '99 half of them were day trading. I shared a cube with a guy who was about to get rich by predicting the next Dell stock split ("Look at the stochastics on that one!" he'd cackle. I thought it was another word for hooters until I looked it up.) If anything we'd be doing his kind a favor, by adding some flywheel to the market.
Oh, Joe, I beg you, don't start on the stock charters. Diss Darwinists, or scientists, or Democratic Underground, one-worlders, antisemites or even conservatives. They are dedicated to sweet reason and disagreeing without being disagreeable compared to those poor lost souls who think that they can predict future stock movements by the anal-retentive charting of past stock movements.
David: whenever I meet one I simply walk in a random pattern. It completely confuses them, and so I'm able to escape.
Charting is a trading tool and it works. Exit and entry points as well as highlighting possible problems with a company is all it's for. Looking at charts absent a full grasp of the fundamentals is a fools game.