2y ago

Stocks and your 401(k) may surge now that Fed rate hikes seem to be over, history shows

www.usatoday.com

News this week that inflation eased more than expected in October solidified the view that the Federal Reserve is done with its most aggressive rate-hike campaign in four decades.

And that could be a boon for the stock market and your 401(k).

74 comments

Keep in mind the following: source
About 158 million Americans, or 61% of U.S. adults, own stock.
The top 1% holds 54% of stocks, worth $19.16 trillion.
The bottom 50% of U.S. adults holds only 0.6% of stocks, worth $21 billion.
White Americans own 89% of stocks, worth $31.87 trillion.
U.S. families held a median value of $52,000 in stocks as of 2022, far below the peak of more than $58,592 in 2001. This figure includes directly held stocks and mutual funds.
- Don’t forget that when someone is talking about the average American “owning stocks” what they really mean is “has a retirement account that works in a way they don’t fully understand, which includes securities such as stocks, that they are not legally allowed to touch until they are 60”.
  Anyone who tries to insinuate that the way average Americans “own stocks” is in any manner comparable to the way the wealthiest do, should honestly literally be put in the stocks where commoners can hurl tomatoes at them.
  
  You are not forced to buy stocks in a 401(k), but most people chose to as it has significant tax advantages over owning them outside of a retirement account. Rich people would LOVE to own more in the same way and pay less taxes.
- Clown economy
  
  It's doing its job.
  Rich people are getting richer while poor people squabble over bullshit.
so we'll go from overvalued to extremely overvalued?
- Magic numbers go up!
- Sectors may be overvalued and individual firms certainly are; however, when you have over a decade of pricing that looks like overvaluation that just turns into the correct value.
  
  So the NVDA 500 is nice and healthy? AIAIAI? to the moon? They're going to definitely 100X in the next 10 years?
This will be great for the 35% of working Americans with a 401k.
Oh good! The imaginary numbers will get larger.
- You shouldn't dismiss those as imaginary as money doesn't pop out of thin air. All those gains need to be created by real workers being exploited harder elsewhere.
  
  When tech companies that have never made a profit are still being traded for significant amounts of money per share, I'd call it imaginary numbers.
  
  Interest means that money does, in fact, pop out of thin air.
  
  The green line requires blood.
  
  The numbers are imagined and have a weak relationship to how many ppl get exploited, but the system as a whole does make people exploit others.
- The reality is that’s what billionaires and, by proxy, the rest of us actually live on.
Pivoting from pensions to a 401(k) is one of the biggest fleeces the ruling class has gotten away with.
Things really were better in the past.
A so the pyramid scheme continues....good?
- Do you think 401ks are a pyramid scheme?
  
  Do you think the stock market is not?
I might be richer if I bought into the stock market, but then I might be richer if I played the poker tables at the local casino.
I also might be a lot poorer.
Not my style.
I can't afford to invest anyway.
- Your financial decisions are your own but I would strongly - strongly advise you to think about your retirement as soon as possible. I have a 401k and a Roth IRA and I shovel as much of my weekly paycheck as I can. If I had started younger, say early twenties, I could have put significantly less money in there and have the same retirement savings now.
  Time is much more important than money.
  
  Time is much more important than money.
  I concur, especially if you have company match programs (like 5%) where you are basically guaranteed to double your savings FOR FREE.
  Wife and I have 401Ks and rollover IRAs and even when the market wasn’t performing to expectations during this recession we only lost $1K total over the last quarter; and now that seems to be, maybe, bouncing back. Over the course of the 20+ years we’ve made something like 200% more* than just leaving it in an account. According to our financial advisor our retirement savings is better than most Americans. That’s pretty frightening since we still have 20 years to go, at the current economic growth, to be able to retire.
  The stock market may be legalized gambling but if you have a financial advisor that makes money when you do (performance based pay) you are almost guaranteed to make a lot more money. And hey, if the stock market collapses we have a much bigger problems than how we’re going to retire.
  *Thats literally off the top of my head. Do not grill me about how crappy or too good that % is. You’re wasting your time since this is just based on what I remember and how I feel about it. No, I can’t be arsed to figure the real data out.
  
  I just had to quit my job, which was so low-paying I didn't have anything to invest with, in order to be a "learning coach" for my daughter's online school. Now we're on a single income. So it must be nice to have that kind of money to put into a retirement account, but we don't have it.
  
  Luck is more important than time. Eg. Ill health, caring for children/relatives, debt, mental health issues, etc. You can do everything right and still lose. That is life. In this hypercapitalist and often unequal system, it is more likely that you will lose.
  A lot of people haven't saved enough for retirement. Not all of them did so out of ignorance. They simply had no choice but to prioritise the short term. More than you think, they're too ashamed to be honest about it, even if it's arguably not their fault.
  Not you because you were simply responding to a comment, but this is why I strongly recommend people don't lecture too much when it comes to retirement and check their privilege. A lot of people are simply unaware of the privileged position they're in, would prefer not to think about how easy it is to lose everything, and that most people simply can't afford to invest even if they wanted to.
  Eg. My current pension plan is to not live beyond 65. It's deeply sad, but it is what it is. I try to focus on the here and now. I'm lucky enough to have a roof over my head, but you'd be surprised how many homeless people have degrees. Hard science degrees too. People with decades of experience. It's scary.
  Eg.
  https://invisiblepeople.tv/how-highly-educated-people-end-up-on-the-streets/
- Not my style.
  Investing in your and your children's future should be your style, it should be everyone's style.
  I can’t afford to invest anyway.
  Investing even 5% of each paycheck makes a massive difference, particularly if you start early. Money invested in total stock market funds doubles roughly every 10 years. Meaning, for every 10 years you decide to put this off, for every 10 years you decide to just not think about your future and your children's future, you need to put twice as much money in to get the same outcome. Investing is not something you do when you are 60 and want to retire at 65, investing in your future is something you start ASAP.
  
  We're in so much debt that investing even 5% of a paycheck is not possible. Every extra cent goes to credit card debt and medical debt.
- Buying a random stock and chanting to the moon might be like going to the casino but investing into a fund or into a balanced portfolio through your bank is not gambling. You really should reconsider our you'll be working until you die, i mean we all could, but I'd rather not risk it.
  You don't have to invest a lot, my bank for example let's me siphon off a little from each paycheck into an investment account.
  
  Oh I already know I'll be working until I die. That's what happens when you work a series of low-paying jobs and live paycheck-to-paycheck.
history didnt have the majority of liquid assets in hedge funds and private equity.
A lot of bearish sentiment in here. Make of that what you will.
- That's the market: bull\bear, boom\bust that's why you need to diversify especially as you get older and not rely on only stocks.
stonks😎
The stock market is historically overvalued right now. The long-term direction is downwards, not upwards.
- That's an interesting take. What do you base your prediction on?
  
  It is well above historical valuations. Ultimately, the problem is that you simply won't get much of an ROI if you keep on investing on stocks at these valuations. So the natural trend is for people to move away from stocks,
  
  not who are responding to but price to earnings ratio is high.
  
  I will add that I still think we are due for a correction but that comes from the major stocks warming that the current quarter sales are gonna look ugly, even grocery stores have been warning that overall sales on amount and expense are down. Discount groceries sure are taking off too. I don't know how much of a dip but I think the post black Friday numbers might cause a short term slump on a lot of retail stocks

74 comments