• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

“I never thought they’d lock HIM up,” sobbed a distraught member of the Lock Her Up Party.

Our job is not to persuade republicans but to defeat them.

If you’re pissed about Biden’s speech, he was talking about you.

The worst democrat is better than the best republican.

Nancy smash is sick of your bullshit.

The GOP couldn’t organize an orgy in a whorehouse with a fist full of 50s.

Proof that we need a blogger ethics panel.

“Squeaker” McCarthy

I’m sure you banged some questionable people yourself.

Wow, you are pre-disappointed. How surprising.

Despite his magical powers, I don’t think Trump is thinking this through, to be honest.

I really should read my own blog.

Authoritarian republicans are opposed to freedom for the rest of us.

Good lord, these people are nuts.

Usually wrong but never in doubt

Prediction: the GOP will rethink its strategy of boycotting future committees.

I didn’t have alien invasion on my 2023 BINGO card.

Take your GOP plan out of the witness protection program.

We are builders in a constant struggle with destroyers. let’s win this.

Is it irresponsible to speculate? It is irresponsible not to.

This fight is for everything.

Accused of treason; bitches about the ratings. I am in awe.

Come on, man.

Let there be snark.

Mobile Menu

  • Winnable House Races
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • Balloon Juice 2023 Pet Calendar (coming soon)
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • War in Ukraine
  • Garden Chats
  • On The Road
  • 2021-22 Fundraising!
You are here: Home / Politics / An Unexamined Scandal / Dumb question of the day on target retirement funds

Dumb question of the day on target retirement funds

by David Anderson|  November 13, 20145:04 pm| 54 Comments

This post is in: An Unexamined Scandal, C.R.E.A.M., Free Markets Solve Everything, Fuck The Middle-Class, #notintendedtobeafactualstatement, All we want is life beyond the thunderdome, Bring on the Brawndo!, Jump! You Fuckers!

FacebookTweetEmail

Over at the Big Picture, there is an extremely depressing post about how the markets are rigged in a myriad of ways:

The big banks and other giants manipulate numerous markets in myriad ways, for example:

  • Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
  • Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
  • Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts
  • Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)
  • Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
  • Cheating homeowners by gaming laws meant to protect people from unfair foreclosure
  • Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this andthis

Actually 2 dumb questions. The first is simple. Why has some ambitious, young US Attorney with either no political ambitions OR lots of political ambition and independent family wealth not started to RICO most of the major US financial players.

The second is far narrower. Most municipal pension funds and smaller corporate pension funds pay a lot in fees for market average performance at best. Is there a better way?

My retirement is overwhelming composed of a 401(K) in a Target 2045 fund.  I outsource all the decision making on asset allocation to professionals who will buy a combination of stock index funds and bond index funds in differing proportions for me for the next 30 years.  I pay under half a point in fees a year for this service and get roughly market average returns.  Why don’t more pension funds contract Vanguard or another big low cost money management firm to manage all of their funds in a Target 2025 or Target 2030 portfolio (shorter time horizons as most defined benefit plans have an average age of participant greater than my age) and dramatically reduce the number of cheat points available for the Wall Stree thieves?

Update 1: Commenter BurnspbEsq answers question #1

Because you need three predicate offenses. Tell me what the predicate offenses are, and describe in detail the admissible evidence that can be used to prove every element of each of those offenses beyond a reasonable doubt.

FacebookTweetEmail
Previous Post: « Thursday Evening Open Thread: O RLY?
Next Post: Nail His Ass to the Wall »

Reader Interactions

54Comments

  1. 1.

    Morzer

    November 13, 2014 at 5:08 pm

    Why don’t more pension funds contract Vanguard or another big low cost money management firm to manage all of their funds in a Target 2025 or Target 2030 portfolio (shorter time horizons as most defined benefit plans have an average age of participant greater than my age) and dramatically reduce the number of cheat points available for the Wall Stree thieves?

    Because the free market must be fed, which requires a steady supply of virgins and hearts extracted from the chests of the living?

  2. 2.

    MattF

    November 13, 2014 at 5:15 pm

    Your list doesn’t even bother mentioning algorithmic trading– which is just a tax on any mere human who attempts to trade in individual stocks. We’re at the point where any short-term strategy is heavily ‘taxed’ by Big Money. And if you believe otherwise your pocket is about to be picked.

  3. 3.

    Richard Mayhew

    November 13, 2014 at 5:22 pm

    @MattF: Oh, go to the link; it is there…. the goal is to move as much money away from the easy to skim segments of the Casino and towards either boring capital appreciation or to areas where the crooks have to work.

    If that works, the smaller pension funds get higher effective rates of return leading to either higher real wages for workers as less money is going into their pension fund, or lower taxes on municipal taxpayers as less money is needed to go into their pension funds.

  4. 4.

    catclub

    November 13, 2014 at 5:23 pm

    @Morzer:

    Because the free market must be fed,

    Specifically, management of your company will get kickbacks from the 401k companies in exchange for locking the employees into a high cost 401k. Vanguard does not give those kickbacks.

    NB. Govermnent employees pay about 1/5 of that 1/2% management fee, plus zero added fees for transfers, etc. TSP rocks.

  5. 5.

    Howard Beale IV

    November 13, 2014 at 5:25 pm

    Regulatory capture and the whiteshoe revolving door between government and the financial legal profession.

  6. 6.

    burnspbesq

    November 13, 2014 at 5:29 pm

    Why has some ambitious, young US Attorney with either no political ambitions OR lots of political ambition and independent family wealth not started to RICO most of the major US financial players.

    Because you need three predicate offenses. Tell me what the predicate offenses are, and describe in detail the admissible evidence that can be used to prove every element of each of those offenses beyond a reasonable doubt. Then we’ll talk.

  7. 7.

    Morzer

    November 13, 2014 at 5:32 pm

    @burnspbesq:

    So your point is that the system has been gamed so thoroughly that flagrant fraud is now, effectively, legal?

  8. 8.

    Steeplejack

    November 13, 2014 at 5:34 pm

    @burnspbesq:

    Do you have a suggestion for an approach to deal with this very real problem?

  9. 9.

    raven

    November 13, 2014 at 5:35 pm

    @Morzer: Now?

  10. 10.

    burnspbesq

    November 13, 2014 at 5:36 pm

    ETA: Assuming for the sake of argument that crimes were committed and can be proven, you can only prosecute in the district where the crime occurred. In the vast majority of cases, that would be the Southern District of New York. If you’re trying to tell me that Preet Bharara doesn’t have the the judgment to know when he’s got a winnable case or the stones to bring it, I’m simply going to laugh in your face. His office’s track record is pretty strong proof to the contrary.

  11. 11.

    Morzer

    November 13, 2014 at 5:36 pm

    @raven:

    Using now in the sense of “from the last 20 years up until and including the present day and foreseeable future”.

  12. 12.

    raven

    November 13, 2014 at 5:37 pm

    @Morzer: 100 at least.

  13. 13.

    Morzer

    November 13, 2014 at 5:40 pm

    @raven:

    My impression is that a lot of the “refinements” to good old fraud have been achieved in the last 20 years. I admit in advance that IANAHOFF.

  14. 14.

    catclub

    November 13, 2014 at 5:43 pm

    @Morzer: When people claimed that US healthcare was the best in the world. I asked them if any other nation was considering adopting our system, and the answer is uniformly, no. In this case, it is kind of the reverse: is there any evidence that some other system, or some other nation’s market, is far better and I should invest there instead? I am all ears.

  15. 15.

    El Caganer

    November 13, 2014 at 5:45 pm

    @burnspbesq: Can DOJ initiate investigations on its own, or is it supposed to get referrals from the regulatory agencies, or both? I’m not very clear on this.

  16. 16.

    Mandalay

    November 13, 2014 at 5:47 pm

    From today’s Guardian: In market-rigging case, US Justice Department treats corporate criminals like juvenile offenders:

    The DoJ has increasingly used a relatively new and declawed method to deal with the aftermath of the financial crisis: the deferred prosecution agreement (DPA).

    These agreements were created 100 years ago to give juvenile defendants and first-time offenders a chance to for rehabilitate themselves. Only in the last 20 years have DPAs migrated to the field of corporate criminals, treating them like kids who’ve just gone down a bad path in life.

    Mary Jo White, who is now the chair of the Securities and Exchange Commission, kicked off the trend of corporate DPAs in a 1994 settlement with Prudential Insurance.

    No one goes to jail and no one ever gets prosecuted. Under a deferred prosecution agreement, the Justice Department allows corporations to pay a fine, then agree to some enhanced supervision and monitoring. The Justice Department appears to admit this in the US Attorney’s manual, when they describe these deals as “agreements not to enforce the law under particular conditions.”

    Needless to say, a deferred prosecution agreement never acts as a deterrent. “Deferred” is a convenient fiction; the Justice Department almost never returns to prosecute. Executives never see a jail cell.

  17. 17.

    Morzer

    November 13, 2014 at 5:50 pm

    @catclub:

    So, would you recommend, for example, currency trading under the US system? How about simply taking out a mortgage? What about a little flutter on the GoldForRonPaul market?

    Obviously, I can’t speak for the financial markets of Lesotho, Tajikistan or, for that matter, Papua New Guinea, but do their (assumed) deficiencies really make the US look significantly better?

  18. 18.

    Morzer

    November 13, 2014 at 5:51 pm

    @raven:

    Mary Jo White, who is now the chair of the Securities and Exchange Commission, kicked off the trend of corporate DPAs in a 1994 settlement with Prudential Insurance.

    Looks like 20 years is leading by a furlong as we approach the winning post.

  19. 19.

    burnspbesq

    November 13, 2014 at 5:53 pm

    @Morzer:

    So your point is that the system has been gamed so thoroughly that flagrant fraud is now, effectively, legal?

    That’s not what I’m saying–at least, not exactly. Securities fraud is not an easy crime to prove, because of the way it’s defined in the statute and how that statute has been interpreted by the Supremes and the Second Circuit.

    In order to convict someone of criminal securities fraud, you need (1) a misstatement or omission (2) of a material fact (3) in connection with the purchase or sale (4) of a security, plus (5) willfulness And you need to prove all of that beyond a reasonable doubt.

    This is a pretty good snapshot of the current state of the law.

    http://www.haynesboone.com/files/Publication/ed770586-b5e6-4af7-83d7-3e45f44886b1/Presentation/PublicationAttachment/5b204bc3-e71a-41f7-8e6b-3f851b2eb010/Criminal%20Enforcement%20of%20the%20US%20Securities%20Laws.pdf

    Materiality would be tough to prove in a case involving sales of mortgage-backed securities c. 2007. The buyers simply didn’t give a shit about the quality of what they were buying, and evidence that “they would have bought it even if they had known it was caca” probably defeats a finding of materiality.

    Now, you could eliminate materiality as an element of the offense, but that requires Congress to amend the 1933 and 1934 acts. I’m sure you don’t have any illusions about how easy that would be given the current lineup in Congress.

  20. 20.

    Mandalay

    November 13, 2014 at 5:55 pm

    If you are feeling prosperous, it’s all because of trickle down economics…

    Wealth inequality in the US is at near record levels according to a new study by academics. Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%. For the bottom 90% of families, a combination of rising debt, the collapse of the value of their assets during the financial crisis, and stagnant real wages have led to the erosion of wealth.

    OTOH, the data strongly suggests that trickle down economics is pile of bullshit. Who knew?

  21. 21.

    Baud

    November 13, 2014 at 5:56 pm

    @Mandalay:

    I’ll go with everyone except the rubes who vote GOP.

  22. 22.

    Mandalay

    November 13, 2014 at 5:57 pm

    @burnspbesq:

    and evidence that “they would have bought it even if they had known it was caca”

    How can there be “evidence” for a hypothetical situation?

  23. 23.

    burnspbesq

    November 13, 2014 at 5:58 pm

    @El Caganer:

    DOJ can, and routinely does, start investigations of possible criminal violations of the securities laws on its own. It’s not required to wait for a referral from SEC, CFTC, or CFPB.

    In fact, it’s probably the case that more referrals go the other way these days, i.e., that when DOJ concludes that a case has problems, it gives it to the agencies to proceed civilly. “Preponderance of the evidence,” the burden of proof in civil cases, is substantially less than “beyond a reasonable doubt.”

  24. 24.

    Morzer

    November 13, 2014 at 5:59 pm

    @burnspbesq:

    Securities fraud is not an easy crime to prove, because of the way it’s defined in the statute and how that statute has been interpreted by the Supremes and the Second Circuit.

    That sounds remarkably like:

    the system has been gamed so thoroughly that flagrant fraud is now, effectively, legal

    But, I admit to being neither a lawyer nor a securities fraudster. However, the night is young and I am sure I can catch up if I just put my mind to it.

  25. 25.

    CONGRATULATIONS!

    November 13, 2014 at 6:01 pm

    So your point is that the system has been gamed so thoroughly that flagrant fraud is now, effectively, legal?

    @Morzer: This has obviously been the case since the late 1970s.

    Just one example: The 401k was never designed as a retirement vehicle, and the people who created it would have thought you insane for using it that way. It was a tax shelter, plain and simple. That it has been pawned off on the populace by both Finance and Government as a pension substitute is truly the biggest fraud ever perpetuated on the American people.

    I would say that fraud is not legal. Fraud is the American way of life. You get ripped off every day and you know it. You just don’t know how badly.

  26. 26.

    burnspbesq

    November 13, 2014 at 6:02 pm

    @Mandalay:

    A contemporaneous email from the buyer that in essence says “I will take whatever you’ve got” would probably do it. Or if defense counsel asks the buyer “did you read the prospectus,” and the answer is “no,” that’s a pretty big problem.

    See also,

    http://dealbook.nytimes.com/2009/11/12/bear-stearns-trial-how-the-scapegoats-escaped/

  27. 27.

    Morzer

    November 13, 2014 at 6:07 pm

    @CONGRATULATIONS!:

    You get ripped off every day and you know it. You just don’t know how badly.

    Believe me, I’ve come to an increasing appreciation of just how disastrous the American system is, both for us and for the rest of the world. Basically, it’s one long swindle that benefits the oligarchs and screws over everyone else. I don’t think it’s a coincidence that the police are both more obviously corrupt and more heavily armed now than at any point in my lifetime.

  28. 28.

    Morzer

    November 13, 2014 at 6:10 pm

    I think by the way, that it’s worth reposting this in the thread:

    http://www.bostonreview.net/books-ideas/mike-konczal-profits-state-legitimacy-parrillo-goldstein-balko

    It’s a very interesting review of three books which collectively discuss just how close we are to reverting to a failed and very corrupt 19th century way of operating as a society.

  29. 29.

    Calouste

    November 13, 2014 at 6:20 pm

    @Morzer: Reading that article, specially about the first two books, made me think that Churchill was incomplete when he made his famous remark: “You can always count on Americans to do the right thing – after they’ve tried everything else.”

    He should have added: “And then they start again from the beginning”

  30. 30.

    Morzer

    November 13, 2014 at 6:26 pm

    @Calouste:

    It’s quite clear that the GOP with the help of the Supremely Corrupt Of The US have now managed to introduce what are, in effect, poll taxes for voting in the red states. If you can’t afford the new ID (which is quite a chunk of a poor person’s income) then you can’t vote. This country is much closer to going back to the genuinely bad old days than anyone wants to believe.

  31. 31.

    raven

    November 13, 2014 at 6:37 pm

    @Morzer: I guess I was thinking more of the entire scope of capitalism.

  32. 32.

    Barbara

    November 13, 2014 at 6:38 pm

    @catclub: Yes. Kickbacks. That has always seemed blatantly obvious to me.

    I usually assume anyone singing the praises of 401(k)s has never actually worked in a place where your choice is Crappy Plan #1, Crappy Plan #2 or Crappy Plan #3. Because that has been our experience in this household.

  33. 33.

    bruceJ

    November 13, 2014 at 6:47 pm

    @Steeplejack: Guillotines and pissed-off peasants.

  34. 34.

    Roger Moore

    November 13, 2014 at 6:52 pm

    Why don’t more pension funds contract Vanguard or another big low cost money management firm to manage all of their funds in a Target 2025 or Target 2030 portfolio (shorter time horizons as most defined benefit plans have an average age of participant greater than my age) and dramatically reduce the number of cheat points available for the Wall Stree thieves?

    Because the pension fund managers are Wall Street thieves. SATSQ.

  35. 35.

    VFX Lurker

    November 13, 2014 at 7:06 pm

    @Richard –

    Why don’t more pension funds contract Vanguard or another big low cost money management firm to manage all of their funds in a Target 2025 or Target 2030 portfolio (shorter time horizons as most defined benefit plans have an average age of participant greater than my age) and dramatically reduce the number of cheat points available for the Wall Street thieves?

    Few thoughts on this:

    – Congrats on having Vanguard Target Retirement funds in your 401(k)! That’s absolutely fantastic. I’m glad whoever’s running your 401(k) is looking out for the best interests of the employees.

    The only concern that I have is that the 90/10 stock/bond allocation in the 2045 Target Retirement fund is hyper-aggressive. If you’re more of an “age in bonds” kind of guy, consider switching to the TR fund that best fits your comfort level every few years. If you almost never look at your 401(k) and/or successfully weathered the volatility of stocks in 2008-2009, the 2045 should be fine.

    – Target funds, which get more conservative over time, are not a good fit for a pension fund. The pension fund does not serve a group that is gradually getting older with time. The pension fund is constantly receiving contributions from employers on behalf of younger workers and constantly paying out to older retirees.

    The traditional pension fund allocation is a static 60/40 stock/bond allocation. A better choice than a target fund might be the Vanguard Lifestrategy Moderate Growth fund. If the pension fund manager wants to bet it all on the States, she could also try the Vanguard Balanced Index fund. Both funds have a fixed 60/40 allocation that does not change with time.

    – Institutional investors get to invest in things unavailable to individual investors, so some may take advantage of that. David Swensen, the manager for Yale’s endowment fund and author of Unconventional Success, has invested in illiquid assets such as timber and gas fields. The Ontario Teachers Pension Fund once co-owned Alias, a computer-graphics company, before they sold it to Autodesk for a profit.

    – That said, William J Bernstein wrote a brief booklet called Skating Where the Puck Was that backs up your original point. The book is available as part of the Kindle Unlimited library if you have a subscription. It’s a fascinating read for individual investors, even though it is aimed at pension fund managers. Bernstein makes the case that as assets become more liquid and easily traded, any investing advantage those assets may have once had over low-cost, total-market index funds evaporates.

    Vanguard does offer institutional-class index funds with a minimum investment of $200,000,000. Maybe more pension funds are thinking the same thing you are, and they’re relying more on Vanguard.

  36. 36.

    RSR

    November 13, 2014 at 8:03 pm

    >>Most municipal pension funds and smaller corporate pension funds pay a lot in fees for market average performance at best. Is there a better way?

    Yes. Montgomery Co, PA shifted its pension funds into “low-cost index funds.”

    http://online.wsj.com/articles/SB10001424127887323300004578557850449451318

    It’s not pie in the sky,” says Mr. Bogle, 84 years old, whose office on the Vanguard campus is about 13 miles from the Montgomery County courthouse. “The arithmetic says it’s all indexing.”

    The county, in the Philadelphia suburbs, says the move is expected to reduce investment fees by roughly two-thirds. It will be paying about 0.13% of its pension assets in investment fees by switching 90% of its assets to Vanguard’s funds. It had been paying about 0.43% in fees to its current crop of so-called active and passive managers.

    “The folks on Wall Street do valuable work,” says Josh Shapiro, chairman of the Montgomery County Board of Commissioners. “But there is no value for the county and other municipalities to be spending these fees and getting a lower return.”

    As of March, Montgomery County’s pension fund had an annualized return of 8.22% in the previous three years. Over that same period, a Vanguard index fund tracking the S&P 500 returned an average of 12.51%.

  37. 37.

    Richard Mayhew

    November 13, 2014 at 8:05 pm

    @VFX Lurker: Okay, this is a good set of answers to Question #2 — why don’t most small pension funds (<$100 million for instance) just send their money to some index fund management or at most a blend of lowly correlated index funds for a variety of sectors where the basic goal is to track the general market with a low servicing cost. There are a few investments that big funds can make that little guys can't... I was using the average age as a reasonable value because fewer and fewer defined benefit plans are open to new enrollment. They have either been shut down with lump sum pay-outs, closed to new enrollment or crammed down in bankruptcy. I think I understand that point IF these pension funds were like health insurance in that the average age would float in a relatively narrow band depending on the general economy. Yet, I don't think that is a reasonable model right now or has been for the past 30 years. As far as my personal 401(k), most but not all is Vanguard 2045; the rest of the picks are a simple US bond index fund, and an international emerging markets fund (5%), so I probably have 80% stock exposure... and right now I'm comfortable enough with that risk.

  38. 38.

    Roger Moore

    November 13, 2014 at 8:26 pm

    @VFX Lurker:

    The only concern that I have is that the 90/10 stock/bond allocation in the 2045 Target Retirement fund is hyper-aggressive.

    OTOH, I’ve heard investment advisers suggest that you should treat any money you have in Social Security as a fixed rate investment and adjust the rest of your portfolio accordingly. A mortgage is also effectively a fixed rate investment. When you factor all that stuff in, you may want to go with a more aggressive portfolio than you think.

  39. 39.

    bvernia

    November 13, 2014 at 8:55 pm

    @burnspbesq: Actually, I think it’s two acts of racketeering activity to establish a “pattern”: One after the passage of RICO, and another within ten years of an earlier act. 18 USC 1961(5).

  40. 40.

    danielx

    November 13, 2014 at 9:05 pm

    Why has some ambitious, young US Attorney with either no political ambitions OR lots of political ambition and independent family wealth not started to RICO most of the major US financial players.

    Is this a serious question? Of course it is, it’s the sixty-four billion dollar question!

    Item: Of the current and past two Treasury secretaries, Hank Paulson was the former CEO of Goldman Sachs, Tim Geithner (currently president of Warburg Pincus) was president of the Federal Reserve Bank of New York, which is virtually an appendage of Wall Street, and Jack Lew is a former COO of Citigroup.

    Item: Eric Holder spent 2001 to 2009 at Covington & Burling, to whence he shall return, taking up his former career of defending corporate clients. He described his rationale for failing to prosecute any Wall Street higher-ups as follows:

    “Responsibility remains so diffuse, and top executives so insulated,” Holder said, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”

    Item: Richard Durbin, Democratic senator from Illinois, committed what Michael Kinsley famously defined as a gaffe* back in 2009:

    “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,”

    The place to which he was referring is the US Senate.

    For further info…read ECONned by Yves Smith or any number of Matt Taibbi articles at Rolling Stone.

    The reason there have been no prosecutions of major Wall Street figures, despite plenty of evidence of fraud and other crimes, is that there is no interest – none, zero, zip, nada – on the part of the Justice Department, the Treasury Department, or the White House in pursuing any such prosecutions. Pity, ain’t it? It is exceedingly unlikely that any such prosecutions will occur in the future either, or so it seems.

    *When some Washington pol or high-up administration figure accidently blurts out the truth.

  41. 41.

    Xenos

    November 13, 2014 at 11:11 pm

    @Morzer: From an EU perspective, I would not expect better treatment in London. And London has displaced most of the rest of the EU’s stock markets, leaving them secondary and a good deal less efficient than London is from a pricing perspective.

    So do you get skimmed a bit when you close your transaction in the market that your broker is obliged to use as a result of her obligation to get the best pricing? Probably. And when I have clients doing big purchases in Spain and Italy they have to do a ton of due diligence in order to keep from getting ripped off. Thus, stock investing is not generally encouraged for those who can not afford to lose their money.

  42. 42.

    Xenos

    November 13, 2014 at 11:17 pm

    This is big news in the industry that I don’t think most people are aware of:
    ¨
    http://online.wsj.com/articles/calpers-to-exit-hedge-funds-1410821083

    I am seeing hedge funds getting into more private-equity style investments. My opinion is that hedge fund investing does not work very consistently without a steady stream of inside information to give an edge, and other criminal or ethically unacceptable practices. With the pressure on SAC we may see a significant change in how the larger institutional clients are willing to invest.

  43. 43.

    mclaren

    November 14, 2014 at 12:54 am

    @burnspbesq:

    Because you need three predicate offenses. Tell me what the predicate offenses are, and describe in detail the admissible evidence that can be used to prove every element of each of those offenses beyond a reasonable doubt. Then we’ll talk.

    As always, burnspbesq is telling ignorant lies incompetently. Par for the course with that shit-for-brains.

    Here’s how a serious prosecutor does it: indict the Wall Street financial crime lords on conspiracy charges. Guess what? You don’t need to prove any kind of predicate horseshit for conspiracy. What’s more, conspiracy is the only charge for which hearsay is admissible in court. The rule of thumb in the legal profession is that any prosecutor worth spit can indict a ham sandwich on conspiracy — and get a conviction.

    Then, once you’ve got conspiracy convictions, you go for a civil trial where the bar of proof is much much lower, and you use civil trials to claw back massive amounts of assets from the Wall Street financial crime lords.

    Finally, you indict the Wall Street criminals yet again on federal 14th amendment charges. By stealing people’s life savings, the Wall Street thieves violated their civil rights. Now you don’t need predicate offenses or intent, just roll out the 14th amendment and play out the way the victims’ lives were destroyed.

    So any federal prosecutor worth spit could (1) indict and convict the Wall Street thieves on conspiracy charges and demand hard time full sentence in a pound-me-in-the-ass federal prison like Marionville or Lompoc; (2) asset-strip these bastards until every dime they owned had been clawed back by the government in civil proceedings; and (3) crush the bastards with federal civil rights prosecution to insure they die in prison.

    But of course clowns like brunspbesq are always ready to rush out of the shower to explain to us non-lawyers why it’s allegedly impossible for a federal prosecutor to indict and convict some high-end loanshark like Jamie Dimon using existing laws. Oddly enough, clowns like burnspbesq fall conspicuously silent when it comes time to explain how the hell a federal prosecutor could destroy the life of someone like Aaron Swartz and threaten 35 years in prison for the trivial “offense” of violating the terms of service of MIT’s public computer usage guidelines.

    Burnspbesq is lying. Plain and simple. Like all lawyers, he twists the facts and the interpretation of the law to suit himself and protect the rich and corrupt, while explaining in tones of sorrowful haughtiness that it’s just not legally possible to do the kinds of things that federal prosecutors do every day of the week when dealing with criminals who aren’t rich beyond the dreams of avarice.

  44. 44.

    Xenos

    November 14, 2014 at 2:48 am

    Yikes. McLaren, you really do not know what you are talking about.

    A good lawyer always tells you up front what you don’t want to hear. Saves wasted time, money, and the process of making a fool of yourself.

  45. 45.

    Kent

    November 14, 2014 at 10:57 am

    Regarding your question #2 the short answer is that many politicians treat pension funds as slush fund to enrich their cronies and contributors. I’m a teacher in Texas and over the past decade we have been treated to an endless parade of scandals as the Rick Perry-appointed pension “trustees” have funneled hundreds of millions of teacher’s pension funds into various investments run by Perry cronies. See for example

    http://www.motherjones.com/politics/2011/09/rick-perry-teacher-pension-fund

    I expect it is the same pretty much everywhere else to some extent. I seem to recall reading similar things about New Jersey and Rhode Island. And if it is not outright corruption then it is a more subtle problem of regulatory capture where the “experts” appointed to administer pensions are too close to the bankster types who are in the business of skimming off the top. Basically the same problem as when all the Goldman Sachs types are running the treasury department during the financial crisis.

  46. 46.

    catclub

    November 14, 2014 at 11:03 am

    @Roger Moore:

    I’ve heard investment advisers suggest that you should treat any money you have in Social Security as a fixed rate investment

    Beat me to it. Great minds and all.

  47. 47.

    Kent

    November 14, 2014 at 11:19 am

    @catclub:

    Social security isn’t a fixed rate investment, it is an income stream and better treated as such in your investment planning.

    For example, if you want to retire with an annual income of $50,000 and social security will provide $25,000 of that then your investment portfolio will need to provide the other $25,000. You just take your social security income stream off the top and then invest to provide for the other $25,000 of retirement income using an appropriate asset allocation for your age and risk tolerance.

    If you start thinking about social security as a fixed income investment then in this example you would need to invest 100% of your retirement savings in stocks to get to a hypothetical 50/50 asset allocation since you are treating social security as half of your assets. This could lead to highly inappropriate and risky asset allocations for individuals who are going to be dependent on their retirement savings for income in retirement.

  48. 48.

    catclub

    November 14, 2014 at 1:02 pm

    @Kent:

    If you start thinking about social security as a fixed income investment then in this example you would need to invest 100% of your retirement savings in stocks to get to a hypothetical 50/50 asset allocation since you are treating social security as half of your assets.

    Exactly my point. The SS income IS half of my assets in that case. Why not treat it as such.

    A person at 55 has not a ten year investment horizon, but more like a 30-40 year investment horizon. For those with limited assets, the most likely ( but definitely not guaranteed) way to NOT outlive your money is to have risky, but growing investments. If you can afford to take no risk, great, but most people are not in that situation.

  49. 49.

    retr2327

    November 14, 2014 at 2:09 pm

    According to the 2009 Manual for Federal Prosecutors, prior DOJ approval through the Organized Crime and Racketeering Section is required for all RICO complaints, informations and indictments, including Fed civil RICO actions and Fed civil RICO investigative demands. So it’s not up to the individual DA to make the decision.

  50. 50.

    Original Lee

    November 14, 2014 at 2:18 pm

    Late to the thread, but also: banks get waivers from fiduciary duty requirements when they have been convicted of criminal fraud, so that they can continue to manage pension funds.

    The DOL and the SEC are starting to rethink the waivers. Gee, I wonder why?

  51. 51.

    chris murphy

    November 14, 2014 at 2:34 pm

    @burnspbesq:

    @burnspbesq

    “If you’re trying to tell me that Preet Bharara doesn’t have the the judgment to know when he’s got a winnable case or the stones to bring it, I’m simply going to laugh in your face. His office’s track record is pretty strong proof to the contrary. “

    That Preet Bharara “doesn’t have the stones” to bring a case is precisely what I’m saying. In what way his record proof to the contrary? The fact that he has brought a few insider trading cases which in no way threaten the institutional interests of the large money center banks certainly isn’t proof.

  52. 52.

    VFX Lurker

    November 14, 2014 at 4:19 pm

    @Roger Moore:

    OTOH, I’ve heard investment advisers suggest that you should treat any money you have in Social Security as a fixed rate investment and adjust the rest of your portfolio accordingly. A mortgage is also effectively a fixed rate investment. When you factor all that stuff in, you may want to go with a more aggressive portfolio than you think.

    I can see that. That can be a completely rational approach.

    On the other hand, sometimes humans are not rational. Richard and the helpful Oblivious Investor have 80/20 portfolios, and I trust that they will stick to their 80/20 allocations through thick and thin.

    However, recently the S&P 500 went down a little, then went up a little. When it went down, I had two acquaintances with 60/40 allocations ask me whether they should flee stocks before they lost any more value. They loved seeing their investments go up in value, but they didn’t like seeing the value go down. This was after a tiny blip — nowhere near what we saw in 2008. I doubt they are candidates for aggressive portfolios.

    I’m not sure about my own emotions, either. Right now I’m almost 40, and my portfolio’s 60/40. I’ll see if I can successfully hold 60/40 for the next 10+ years. If so, that could be my allocation for life. If not…back to age-in-bonds for me. :-D

  53. 53.

    scottinnj

    November 15, 2014 at 7:03 am

    @VFX Lurker: @VFX Lurker:

    Also, too, the Vanguard Target Funds include a meaningful amount of international stock exposure which is important. The Target 2045 Fund has 63.2% of its holdings in US Equities and 26.8% in overseas equities, so 30% of its equity (and 20% of its bonds) are outside the US. I think many ‘design your own’ 401k participants miss the positive diversification impacts of international holdings.

    Jack Bogle is for my money is possibly the greatest business executive who ever lived.

Comments are closed.

Trackbacks

  1. Oversight | says:
    November 19, 2014 at 7:05 am

    […] like if this country had, say, a governmental agency that provided regulation and oversight on an untrustworthy and reckless financial industry. Even better might be if there was another governmental department that ensured […]

Primary Sidebar

Recent Comments

  • stinger on Open Thread: Is This For Real? (May 31, 2023 @ 11:10pm)
  • cain on Sassy (May 31, 2023 @ 11:10pm)
  • Geminid on War for Ukraine Day 462: The War for Ukraine Finally Begins to Come Home a Bit for the Russians (May 31, 2023 @ 11:09pm)
  • cain on Sassy (May 31, 2023 @ 11:07pm)
  • rikyrah on Wednesday Evening Open Thread: Enconium (May 31, 2023 @ 11:05pm)

Balloon Juice Meetups!

All Meetups
Seattle Meetup on Sat 5/13 at 5pm!

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
We All Need A Little Kindness
Classified Documents: A Primer
State & Local Elections Discussion

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Mailing List Signup
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)

Twitter / Spoutible

Balloon Juice (Spoutible)
WaterGirl (Spoutible)
TaMara (Spoutible)
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
TaMara
David Anderson
Major Major Major Major
ActualCitizensUnited

Join the Fight!

Join the Fight Signup Form
All Join the Fight Posts

Balloon Juice Events

5/14  The Apocalypse
5/20  Home Away from Home
5/29  We’re Back, Baby
7/21  Merging!

Balloon Juice for Ukraine

Donate

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2023 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!