Re:Private Equity Investing Now Allowed in 401(k) Retirement...
by lend000 on Friday June 19, 2020 @05:23PM
(#23579002)
The alternative is to not invest in companies or asset classes you don't understand. Most people are capable of understanding real estate, cash, and bonds, but the latter two have become severely weakened in the post-Bretton Woods economy. This has also coincided with a huge increase in wealth inequality, and index funds haven't changed that.
Average people should be able to grow their wealth over time without throwing money into inefficient instruments.
Re:Private Equity Investing Now Allowed in 401(k) Retirement...
by ralph84 on Friday June 19, 2020 @06:10PM
(#23579347)
Before the rise of index investing, mom and pop didn't invest in stocks at all. They had a defined-benefit pension and kept their savings in a portfolio of CDs and government bonds.
Re:Private Equity Investing Now Allowed in 401(k) Retirement...
by SpicyLemonZest on Friday June 19, 2020 @04:58PM
(#23578793)
Yeah, I certainly can't dispute that.
The alternative to that, before the rise and acceptance of index investing, was people using their 401k money to buy individual stocks. But we all know that your standard mom and pop investor is not going to have time to cut through the bullshit and effectively research companies when they have a 40hr/wk job, a family, hobbies, etc. So those 401k investments were based mostly on personal hunches, word of mouth, and pump and dump schemes. That was really dumb money, and did even less for the economy.
So while I agree with you that index investing isn't doing a ton to push corporate management to do better in the way "smart money" does (in theory), when you consider the world before index investing was a thing you have to admit that money today is on average "smarter."