Occupy Wall Street Sept 17 2011

[jacee]

Then they can effect change from within by

1. Joining a riding association to be part of decision making at the riding level.

2. Running as a candidate in the party of their choice.

3. Buying a party membership to vote the party leader. The NDP and the Liberals will soon be voting for a new federal leader. This is a great opportunity for their supporters to get involved.

Another option is a spoiled ballot. I personally don't advocate this but at least their discontent is represented in the final vote tally.

Sadly too many, especially the under 25 age group, can't be bothered. They prefer to stay glued to the tube and their ipads/laptops.

ofercrissakes cappy.

Save it for the next election.

Party lines aren't for everyone.

Politicians who train for the current system aren't the kind we need.(see your signature )

Activism outside the system is absolutely necessary.

Did any politicians save the homeowner from eviction?

No. Activists did.

Stuff your party politics party line crapola.

Listen to the young people and learn.

It's about time we stopped waiting for politicians to make 'change from within'. They can't. Greed and power have them locked up tight.

The youth are showing us how to go out and make changes ourselves.

Edited October 18, 2011 by jacee

[jacee]

With the article stating the Toronto 99%ers now total around 20, what percentage of Ontario’s population is that? Or even Toronto’s? We are the 99% indeed………Maybe their math skills are what’s holding them back?

Dream on.

Those are just the ones who chose to go to Bay Street this morning instead of to the rally at Ryerson Several hundred went to Bay Street this evening and tied up traffic just a bit.

A couple hundred are camped out, joined by more during the day.

Edited October 18, 2011 by jacee

[Guest Derek L]

Dream on.

Those are just the ones who chose to go to Bay Street this morning instead of to the rally at Ryerson Several hundred went to Bay Street this evening and tied up traffic just a bit.

A couple hundred are camped out.

A couple of hundred

I've been to craft fairs gun shows with more than that So what, they've got a few hundred in ten cities....what's that? A couple thousand?

Canada has more millionaires then “99%ers”

[blueblood]

ofercrissakes cappy.

Save it for the next election.

Party lines aren't for everyone.

Politicians who train for the current system aren't the kind we need.(see your signature )

Activism outside the system is absolutely necessary.

Did any politicians save the homeowner from eviction?

No. Activists did.

Stuff your party politics party line crapola.

Listen to the young people and learn.

It's about time we stopped waiting for politicians to make 'change from within'. They can't. Greed and power have them locked up tight.

The youth are showing us how to go out and make changes ourselves.

The tea party was a grass roots movement and they now have senators and representatives in congress. They brought their ideas and helped shape the national debate. I'd say they brought change from within.

[jacee]

The tea party was a grass roots movement and they now have senators and representatives in congress. They brought their ideas and helped shape the national debate. I'd say they brought change from within.

Depends on who you talk to. Republicans would agree with you, but some original Tea Partiers say that the movement was co-opted by Republicans and perverted to fit the establishment mold.

I'm not surprised to see Liberal (Bob Rae) and NDP reps attempting to co-opt the OCCUPY movement in Canada for photo ops and media exposure, but I hope the movement can maintain its independence in spite of such political tactics.

[GostHacked]

The tea party was a grass roots movement and they now have senators and representatives in congress. They brought their ideas and helped shape the national debate. I'd say they brought change from within.

It was grass roots, then the Tea Party hijacked the whole thing for their means.

[capricorn]

ofercrissakes cappy.

Save it for the next election.

So your definition of democracy is restricted to elections and voting? Who knew.

Listen to the young people and learn.

That was already tried in the 60s and look where we are now. The young people of that time and their followers morphed into leftist politicians and leaders of non-profit special interest groups. And the media was compliant by giving them a platform to spread their message that what the citizens demanded were universal social programs. The alternative, said the leftists, was that people would be dying in the streets. With a booming economy, politicians of all stripe were so eager to be elected and re-elected they threw entitlements at them like there was no tomorrow. And the leftists and do-gooders kept coming back for more, screw the taxpayers.

It's about time we stopped waiting for politicians to make 'change from within'. They can't. Greed and power have them locked up tight.

Aren't you happy you found a soapbox here to spout such empty rhetoric?

The youth are showing us how to go out and make changes ourselves.

There is no us. You need youth to show you the way. Mature people know what changes they need to make to improve their lives and the lives of their children.

[jacee]

CONFERENCE BOARD OF CANADA HOT TOPIC: World Income Inequality

Is the world becoming more unequal? Key Messages Of total world income, 42 per cent goes to those who make up the richest 10 per cent of the world’s population, while just 1 per cent goes to those who make up the poorest 10 per cent. Income inequality among countries in the world rose sharply between the 1980s and the mid-1990s, before levelling off and then falling after 2000. Countries with very high inequality are clustered in South America and southern Africa. Countries with low inequality are mostly in Europe. Canada and the U.S. have medium income inequality. The increase in income inequality has been more rapid in Canada than in the U.S. since the mid-1990s

The post-2000 decline in income inequality was due to much stronger economic growth in the same three groups: Latin America, Eastern Europe and former Soviet countries, and African countries Even with the post-2000 fall in income inequality, however, the Gini index in 2010 remained higher than it was in the 1970s and most of the 1980s. The explanations for why income inequality is higher today than in the early 1980s tend to fall into two broad categories: market forces and institutional forces.

Market forces, particularly skill-biased technical change (SBTC) and increased globalization, are creating a rising demand for highly skilled labour. Edward Lazear, chairman of the U.S. President’s Council of Economic Advisors, explained this in a 2006 speech: “In our technologically advanced society, skill has higher value than it 1 does in a less technologically advanced society.” 11 As developed countries import does in a less technologically advanced society.” more low-skilled-intensive goods and export more skills-intensive goods, jobs in low- skilled industries are lost in those developed countries

However, not all researchers agree that market forces are at the root of all or even most of the rising inequality. For instance, in a paper published in the Economics, David Card and John DiNardo argue that “contrary to the impression conveyed by most of the recent literature, the SBTC hypothesis falls short as a 12 unicausal explanation.” 12

An alternative explanation, put forward by economist Paul unicausal explanation.” An alternative explanation, put forward by economist Paul Krugman and others, is that the increase in inequality can be attributed to institutional forces, like declines in unionization rates, stagnating minimum wage rates, deregulation, and national policies that favour the wealthy

Branko Milanovic argues that even if market forces are partly to blame for rising income inequality, the idea that governments should not intervene in the market should be rejected. The question of global income inequality cannot, he states, “be taken out of the social arena by evoking ‘the market.’ The market economy is a social construct, created, or rather discovered, to serve people, and thus raising questions 13 about the way it functions is fully legitimate in every democratic society.” 13 about the way it functions is fully legitimate in every democratic society.”

The influences of power/wealth will always try to increase flow of wealth to the wealthy and away from middle/lower income people.

Without strong public input, protest, strike etc., there will always be increasing inequality and resulting poverty, dissatisfaction with government and wealth, and civil strife.

The influence of ordinary workers/employees on employers/investors/government must be powerful and persistent to balance the constant power and 'pull' of wealth to the wealthy.

As I see it, these protests are a sign of a democracy healthy enough to tolerate the opposing force of ordinary people expressing their outrage at the current and increasing destruction of the middle class due to the increasing flight of wealth to the wealthiEST.

[blueblood]

CONFERENCE BOARD OF CANADA HOT TOPIC: World Income Inequality

Is the world becoming more unequal? Key Messages Of total world income, 42 per cent goes to those who make up the richest 10 per cent of the world’s population, while just 1 per cent goes to those who make up the poorest 10 per cent. Income inequality among countries in the world rose sharply between the 1980s and the mid-1990s, before levelling off and then falling after 2000. Countries with very high inequality are clustered in South America and southern Africa. Countries with low inequality are mostly in Europe. Canada and the U.S. have medium income inequality. The increase in income inequality has been more rapid in Canada than in the U.S. since the mid-1990s

The post-2000 decline in income inequality was due to much stronger economic growth in the same three groups: Latin America, Eastern Europe and former Soviet countries, and African countries Even with the post-2000 fall in income inequality, however, the Gini index in 2010 remained higher than it was in the 1970s and most of the 1980s. The explanations for why income inequality is higher today than in the early 1980s tend to fall into two broad categories: market forces and institutional forces.

Market forces, particularly skill-biased technical change (SBTC) and increased globalization, are creating a rising demand for highly skilled labour. Edward Lazear, chairman of the U.S. President’s Council of Economic Advisors, explained this in a 2006 speech: “In our technologically advanced society, skill has higher value than it 1 does in a less technologically advanced society.” 11 As developed countries import does in a less technologically advanced society.” more low-skilled-intensive goods and export more skills-intensive goods, jobs in low- skilled industries are lost in those developed countries

However, not all researchers agree that market forces are at the root of all or even most of the rising inequality. For instance, in a paper published in the Economics, David Card and John DiNardo argue that “contrary to the impression conveyed by most of the recent literature, the SBTC hypothesis falls short as a 12 unicausal explanation.” 12

An alternative explanation, put forward by economist Paul unicausal explanation.” An alternative explanation, put forward by economist Paul Krugman and others, is that the increase in inequality can be attributed to institutional forces, like declines in unionization rates, stagnating minimum wage rates, deregulation, and national policies that favour the wealthy

Branko Milanovic argues that even if market forces are partly to blame for rising income inequality, the idea that governments should not intervene in the market should be rejected. The question of global income inequality cannot, he states, “be taken out of the social arena by evoking ‘the market.’ The market economy is a social construct, created, or rather discovered, to serve people, and thus raising questions 13 about the way it functions is fully legitimate in every democratic society.” 13 about the way it functions is fully legitimate in every democratic society.”

The influences of power/wealth will always try to increase flow of wealth to the wealthy and away from middle/lower income people.

Without strong public input, protest, strike etc., there will always be increasing inequality and resulting poverty, dissatisfaction with government and wealth, and civil strife.

The influence of ordinary workers/employees on employers/investors/government must be powerful and persistent to balance the constant power and 'pull' of wealth to the wealthy.

As I see it, these protests are a sign of a democracy healthy enough to tolerate the opposing force of ordinary people expressing their outrage at the current and increasing destruction of the middle class due to the increasing flight of wealth to the wealthiEST.

How is there a problem with the gap, when the bottom end of our society gets to enjoy amenities that people in third world countries can only dream of? A poor person can drive a clunker car, the rich person can have 10 aston martins, but a person in china has a bike, or worse someone in afghanistan has a donkey. What's happening with globalization is that the person in china gets to upgrade to a clunker.

What you are failing to realize is that people are different. Some excel at things and some don't. Some take risks and some don't. Some are willing to go the extra mile, and some are fine with making less and having more time/less headaches. Theres a gap in abilities as far as sports go, what your are suggesting is tantamount to some elite level athletes not training so that when a draft comes up for their sport, a general manager doesn't get a good pool to choose from and that results in crappy entertainment for everyone and people watch something else, and the big salaries of athletes evaporates.

Or we can look at the story of where the professor decided to give everyone in the class the class average. That turned out to be a disaster, the high average kids stopped studying because they figured why should they work so hard when they are only going to get a certain mark less than they would get in the old system. As a result the average dropped.

...I wonder what those protesters would say if everyone who went to university got the same grade as the class average, and a fail is still a fail. Food for thought.

[capricorn]

How is there a problem with the gap, when the bottom end of our society gets to enjoy amenities that people in third world countries can only dream of?

In her post, jacee omitted the following from her linked document.

If you are lucky enough to be born in a rich country, your income level—even if you are in a low-income group within your country—is likely higher than that of most people in the world.

For example, the 20 per cent of Canadians in the lowest income group had an average income in 2008 of $14,500. Converting this to U.S. dollars at purchasing power parity results in a per capita income of about $12,000. This income figure is higher than that of the average person in 120 countries in the world—accounting for 75 per cent of the world’s population. In other words, as a group, low-income Canadians are richer than 75 per cent of the world.

http://www.conferenceboard.ca/hcp/hot-topics/worldInequality.aspx#anchor6a

I don't know about you blueblood, I know plenty of folks in that bottom 20% who are quite happy just the way they are. And why not if they're content? If they hit bumps in the road, there are plenty of safety nets in our system to help them over them.

[jacee]

How is there a problem with the gap, when the bottom end of our society gets to enjoy amenities that people in third world countries can only dream of? A poor person can drive a clunker car, the rich person can have 10 aston martins, but a person in china has a bike, or worse someone in afghanistan has a donkey. What's happening with globalization is that the person in china gets to upgrade to a clunker.

What you are failing to realize is that

1) Canadians don't live in an oppressive country where protesters are shot en masse, and we will not tolerate the forms of oppression that exist in China and Afghanistan. All voices and votes are valued here and it will always be so. If the predatory wealthy don't like democracy, they a free to relocate, AFTER THEY HAVE PAID UP THEIR LEGAL TAXES OWING.

2) Canadian wages must address the costs of living in Canada, like heating in winter, warm clothes, and our high food costs. Most people can't get to their workplaces by bicycle, and mass transit is not well enough developed to substitute for cars. Besides, the oil industry would have a hissy fit if working people ditched their cars.

What you are failing to realize is that people are different. Some excel at things and some don't. Some take risks and some don't. Some are willing to go the extra mile, and some are fine with making less and having more time/less headaches. Theres a gap in abilities as far as sports go, what your are suggesting is tantamount to some elite level athletes not training so that when a draft comes up for their sport, a general manager doesn't get a good pool to choose from and that results in crappy entertainment for everyone and people watch something else, and the big salaries of athletes evaporates.

Or we can look at the story of where the professor decided to give everyone in the class the class average. That turned out to be a disaster, the high average kids stopped studying because they figured why should they work so hard when they are only going to get a certain mark less than they would get in the old system. As a result the average dropped.

...I wonder what those protesters would say if everyone who went to university got the same grade as the class average, and a fail is still a fail. Food for thought.

Your analogies are stupid, inaccurate and misleading, so I won't address them.

The fact remains that it is much easier for the wealthy to become even wealthier, some obscenely wealthy, than it is for an ordinary person to feed, house and clothe his/her family. That's fine if ordinary people can still take care of their families and young people can get jobs.

However, right now experienced workers are getting laid off, losing wages and benefits, and unable to support their families, while many educated young people are unable to find jobs. This puts additional strain on social services support.

When wealth is increasingly flowing to the already obscenely wealthy while experienced and educated people can't support themselves, an adjustment to wealth distribution is necessary because there is something seriously wrong with the system.

If no adjustment - regulation - is done, ordinary people will revolt violently against the injustice and obscenity of conspicuous wealth. That's just the facts.

These are currently peaceful democratic protests for the purpose of educating the public and the sheltered and ignorant wealthy. Without real change by the finance, corporate and government establishments, however, history (and present events in Europe) demonstrate what the wealthy can expect here too.

The G20 'austerity' agenda of the wealthy and powerful is not appropriate and will not be tolerated by ordinary Canadians, since social supports are more necessary now.

Change is gonna come, one way or another. Posters here who try to defend the 'rights' of predatory wealth and continue riding their gravy train down the same track the same way are missing an important observation: Their light just turned yellow ... and there's only a very short time to stop your gravy train before the light turns red.

Change is gonna come, one way or another. Your choice, and there isn't much leeway left for bad choices because you've already used those up.

Edited October 19, 2011 by jacee

[blueblood]

What you are failing to realize is that

1) Canadians don't live in an oppressive country where protesters are shot en masse, and we will not tolerate the forms of oppression that exist in China and Afghanistan. All voices and votes are valued here and it will always be so. If the predatory wealthy don't like democracy, they a free to relocate, AFTER THEY HAVE PAID UP THEIR LEGAL TAXES OWING.

2) Canadian wages must address the costs of living in Canada, like heating in winter, warm clothes, and our high food costs. Most people can't get to their workplaces by bicycle, and mass transit is not well enough developed to substitute for cars. Besides, the oil industry would have a hissy fit if working people ditched their cars.

Your analogies are stupid, inaccurate and misleading, so I won't address them.

The fact remains that it is much easier for the wealthy to become even wealthier, some obscenely wealthy, than it is for an ordinary person to feed, house and clothe his/her family. That's fine if ordinary people can still take care of their families and young people can get jobs.

However, right now experienced workers are getting laid off, losing wages and benefits, and unable to support their families, while many educated young people are unable to find jobs. This puts additional strain on social services support.

When wealth is increasingly flowing to the already obscenely wealthy while experienced and educated people can't support themselves, an adjustment to wealth distribution is necessary because there is something seriously wrong with the system.

If no adjustment - regulation - is done, ordinary people will revolt violently against the injustice and obscenity of conspicuous wealth. That's just the facts.

These are currently peaceful democratic protests for the purpose of educating the public and the sheltered and ignorant wealthy. Without real change by the finance, corporate and government establishments, however, history (and present events in Europe) demonstrate what the wealthy can expect here too.

The G20 'austerity' agenda of the wealthy and powerful is not appropriate and will not be tolerated by ordinary Canadians, since social supports are more necessary now.

Change is gonna come, one way or another. Posters here who try to defend the 'rights' of predatory wealth and continue riding their gravy train down the same track the same way are missing an important observation: Their light just turned yellow ... and there's only a very short time to stop your gravy train before the light turns red.

Change is gonna come, one way or another. Your choice, and there isn't much leeway left for bad choices because you've already used those up.

How are we the predatory wealthy? does being different and being good at something make you a predator. Remember that people freely buy things from corporations and get satisfaction from using their products, and in turn the corporation gets paid. What's predatory about that? It goes the other way, if the protestors don't like living in a free society, they are free to emigrate to places that are more in line with their mindset, yet they willingly choose to live in a society with corporations in it, why is that?

Wages are set by what the workers are willing to work for and how much companies are willing to pay. That's it that's all. There might be some things that are unaffordable and prices adjust based on where demand is. Remember if there is no money, there is no demand. If gas prices get too expensive, fewer people drive and increase the supply of gas. Companies wanting to get rid of the gas have to drop prices.

All you have to say is my analogies are stupid is your response to them? No debate on their points? Score one for team blue.

In western canada, there are lots of jobs. Perhaps if americans and easterners would lower their cost of labour they could have jobs too. If I give someone 50K to start a business and take a 10% royalty, and that business takes off, and my net worth from all my other stuff as well gets to 100 million dollars and the person doing the start up gets 1 million, who cares? There's a gap but everyone is fine.

Ordinary Canadians supported austerity during the Paul Martin tenure as finance minister, and Harper's plan to cut spending by 19 yrs. of fiscally responsible gov't, which has cut cut cut.

THe only education that is needed is for those university grads/students protesting about how business and the economy works.

[cybercoma]

You guys are really scraping at the bottom of the barrel if your arguments are hinging around the idea that people should suck it up because at least they're wealthier than people in Somalia, for instance. If that's your benchmark, then what does that say about the investment fund managers bringing in millions? It's completely unconscionable.

[blueblood]

You guys are really scraping at the bottom of the barrel if your arguments are hinging around the idea that people should suck it up because at least they're wealthier than people in Somalia, for instance. If that's your benchmark, then what does that say about the investment fund managers bringing in millions? It's completely unconscionable.

Except that those investment fund managers are helping out with people's retirements so they don't all live on that pittance of a gov't pension, and they invest and provide capital to firms that supply jobs all around the world making it a richer place for everyone.

It says that those protesters wasted their time and money in university and should have went into commerce and can become hedge fund managers and join in the party as well. Hell if there's enough of them they wouldn't be making millions, there would be so much their compensation would come down.

[cybercoma]

Except that those investment fund managers are helping out with people's retirements so they don't all live on that pittance of a gov't pension, and they invest and provide capital to firms that supply jobs all around the world making it a richer place for everyone.

50% of Americans don't own any stock whatsoever. Of those that do, the vast majority of them own less than $2000 and that includes 401(k) packages and retirement funds. So, yeah... they're helping themselves to a healthy retirement.

It says that those protesters wasted their time and money in university and should have went into commerce and can become hedge fund managers and join in the party as well. Hell if there's enough of them they wouldn't be making millions, there would be so much their compensation would come down.

Hell, if there was enough of them that went to school to be investment fund managers they could graduate and be exactly in the same position they are now. That is what you just said.

[cybercoma]

It's interesting to note how they skew the numbers on 401(k) plans too. They'll tell you that the average package is around $50,000. Since income is not a normal curve, but skewed, it is more appropriate to take the median income--the point at which 50% are above and 50% are below. The median value of 401(k) plans is actually $10,000. That kind of skew tells you how huge the disparity is from the top earners to everybody else. In other words, it's a myth that they're helping everyone. They're helping themselves.

Edited October 19, 2011 by cybercoma

[blueblood]

50% of Americans don't own any stock whatsoever. Of those that do, the vast majority of them own less than $2000 and that includes 401(k) packages and retirement funds. So, yeah... they're helping themselves to a healthy retirement.

Hell, if there was enough of them that went to school to be investment fund managers they could graduate and be exactly in the same position they are now. That is what you just said.

A better retirement than gov't pension. Perhaps they should start saving money and not blow it on 400,000 dollar houses and brand new cars.

Except that there is more use for investment fund managers than liberal arts grads. Lots of investment dollars going to the BRIC countries, maybe those grads should look at ways for helping facilitate that and making money off of it.

[bush_cheney2004]

50% of Americans don't own any stock whatsoever. Of those that do, the vast majority of them own less than $2000 and that includes 401(k) packages and retirement funds. So, yeah... they're helping themselves to a healthy retirement.

You have no idea what dollar amounts Americans own in the way of stock through ESOP, 401k, 403b, IRAs, Roth, or cash accounts. Stop blowing smoke about Americans when you don't know what you're talking about. More than 50% of Americans do own stock, and that is down from higher levels before the 2008 recession.

http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx

How much stock does the average American own?

According to the Federal Reserve's most recent report, the median value of directly held stock in 2009, for families holding any, was approximately $12,000. This represented a decline of 36% from $18,500 reported in 2007 and was largely attributable to the stock market's free fall and the cyclical unemployment that forced households to raid their savings.

Read more:

http://www.brighthub.com/money/investing/articles/117044.aspx#ixzz1bCK1bGZJ

Edited October 19, 2011 by bush_cheney2004

[Bonam]

You have no idea what dollar amounts Americans own in the way of stock through ESOP, 401k, 403b, IRAs, Roth, or cash accounts. Stop blowing smoke about Americans when you don't know what you're talking about. More than 50% of Americans do own stock, and that is down from higher levels before the 2008 recession.

http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx

Hmm, interesting graph. It seems to show that spikes in stock market investment are promptly followed by crashes. Or, looking at it another way, by the time most of the population jumps on the wagon, the bubble is ready to burst. Would be interesting to see this data going back a few more decades to see if a similar pattern holds for prior crashes. If so, market investment exceeding ~65% could be a used as an indicator to help predict future crashes. It would also fit the common wisdom among traders, that people generally do whatever will lose them the most money in the markets (i.e. invest just before a crash, buy high sell low, etc).

[bush_cheney2004]

Hmm, interesting graph. It seems to show that spikes in stock market investment are promptly followed by crashes. Or, looking at it another way, by the time most of the population jumps on the wagon, the bubble is ready to burst.

That is to be expected as more defined contribution plans replace defined benefit plans (pensions). One of the reasons the US stock markets chased such stupid high P/E multiples is that all those BILLIONS in 401K/403b money had to go somewhere, and not just in bonds or money market accounts.

Would be interesting to see this data going back a few more decades to see if a similar pattern holds for prior crashes. If so, market investment exceeding ~65% could be a used as an indicator to help predict future crashes. It would also fit the common wisdom among traders, that people generally do whatever will lose them the most money in the markets (i.e. invest just before a crash, buy high sell low, etc).

As individuals, yes, but professional mutual fund managers are better than that on average. The mistake that a lot of people make is to trust dollar cost averaging only, and disregarding trends/timing. Some people just should not be in equity markets at all, especially those with short time horizons.

Edited October 19, 2011 by bush_cheney2004

[jacee]

It's completely unconscionable.

Predatory wealth isn't capable of comprehending words like "unconscionable", nor do they care. Money has no morality. It's an end in itself. Edited October 19, 2011 by jacee

[blueblood]

Predatory wealth isn't capable of comprehend words like "unconscionable", nor do they care. Money has no morality. It's an end in itself.

After being explained how hedge funds work, all you can say is money has no morality???

Outstanding

[Bonam]

As individuals, yes, but professional mutual fund managers are better than that on average.

Actually, a simple mathematical argument shows that the average mutual fund manager will underperform simply investing in a market index such as the S&P through a low-cost ETF that accurately tracks it (such as SPY).

It goes something like this, throwing in some numbers so I don't have to write out algebra:

Let's say the market goes up 10% in a year. Everything is part of the market, including mutual funds. Let's say 50% of all the capital out there is invested in the market through mutual funds, and 50% directly into stocks and exchange traded funds. The 50% in stocks will go up 10% just like the overall market, since the stocks are the market. Since the overall market went up by 10%, and stocks went up by 10%, the underlying instruments of the mutual funds also had to go up by 10% (or else things don't add up). However, since mutual funds always have a fee, the investor will see that same average 10% return minus the fee. So in a year the market goes up 10%, the average mutual fund investor will see ~8% return (assuming a 2% fee).

You can see this in numerous empirical studies. Mutual funds, on average, have historically underperformed the markets by several percent almost every single year.

Some mutual funds outperform the market, while others underperform, but the average performance is worse than the market. Further, which funds outperform changes from year to year. Picking a fund that will outperform the market is more challenging than picking a stock that will outperform it, since the mutual fund is saddled with a 2-3% fee that it must overcome.

For the buy-and-hold investor that knows nothing about markets, by far the best advice is just to buy a broad index ETF and stay away from mutual funds.

Edited October 19, 2011 by Bonam

[bush_cheney2004]

It's interesting to note how they skew the numbers on 401(k) plans too. They'll tell you that the average package is around $50,000. Since income is not a normal curve, but skewed, it is more appropriate to take the median income--the point at which 50% are above and 50% are below. The median value of 401(k) plans is actually $10,000.

Again...this makes absolutely no sense and ignores many other retirement planning vehicles available to Americans. Why do you make this stuff up?

[bush_cheney2004]

...You can see this in numerous empirical studies. Mutual funds, on average, have historically underperformed the markets by several percent almost every single year.

Depends on the mutual fund....nobody invests on average. Morningstar ratings is one accepted method for determining winners from losers. Front loaded funds are not the usual employee 401k/403b experience, which enjoy very low fees by design.

Over 25 years ago Americans were told that the stock market had a historical average return of about 8%. Few people took the time to understand what average really means, and they got a taste for that in 2008.

Edited October 19, 2011 by bush_cheney2004