Doesn’t retirement savings fuel every bubble?
https://www.reuters.com/legal/government/states-challenge-na...
https://www.washingtonpost.com/wp-intelligence/ai-tech-brief...
https://fortune.com/2026/06/04/spacex-anthropic-massive-ipo-...
https://www.nytimes.com/1981/05/18/business/reagan-cut-and-p...
Which generation of leadership did that benefit most? Trump and Co
Their only shtick is loot everyone else, save themselves; change the finance ratio so it all flows to them; see it with end of ZIRP, RAM and tech prices...
Americans still believing the oral traditions of The Dream despite decades of headlines about homeless vets being denied and endless "once in a lifetime" bubbles millennials have dealt with every 5-8 years since they became adults... fuckin gen pop dude... it's so clearly just wielding oral traditions on the part of the rich to serve their own biological imperative
Not exactly something a President gonna call out verbatim in State of the Union.
In fact, it's arguably worse than deliberately investing in them, because you're completely indifferent to the soundness of their business model. The hope is just that through the magic of "efficient markets", someone else will arbitrage your errors away. I don't know if there are enough takers for a bet of this size.
Companies have value: at the very least they can be liquidated and their assets sold off (book value). They also tend to generate profits and may choose to distribute them (dividends, share buybacks): this also has value to shareholders.
Where the random walk comes in is that the information of how healthy or profitable a company is gives it a (perceived) value of $x. But new information can be learned at any point about the company which can change the (perceived) outlook of its health and profitability, which may give it a value of $y. Now it could be that x>y or x<y.
It is the fact that this new information (real, rumoured, fake) can come at any random point in the future:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
If you are an index investor, the bet is that the economy (and the market) will eventually recover. Which historically it has:
* https://awealthofcommonsense.com/2023/05/the-stock-market-is...
Incorrect. Success is predicated on not panicking and staying the course:
* https://awealthofcommonsense.com/2023/05/the-stock-market-is...
Even if there are bubble(s) and they burst, or there are crashes for any other reason, you can succeed:
* https://awealthofcommonsense.com/2014/02/worlds-worst-market...
If things were as simple as you suggest absolutely nobody would invest in individual stocks.
Which "market"? Equities? Which of those? US, Canada, Europe, other, all? Bond market? Government, corporate?
Your goals, timeline, and risk profile should determine the contents of your portfolio.
> If things were as simple as you suggest absolutely nobody would invest in individual stocks.
It is as simple as I suggest, and most people should not invest in individual stocks:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
The "in aggregate" is doing some heavy lifting here. Active management holds concentrated positions in certain investments because they think they will outperform. Active folks believe they have found market inefficiencies, whereas passive folks lean towards the market being (relatively) efficient (enough) and chasing returns won't work (at least for most people):
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
"Active" and "passive" exist on a spectrum and are not binary:
Active rarely outperforms… after fees:
> […] We're a hundred students into class, 99 people make a left shoe, one person makes a right shoe. One of the students in the class made a right shoe." And then I say, "A pair of shoes goes for $100." I also made a left shoe. And so I approached the only person with the right shoe and they said, "Karl Marx said that how much time you spent making something determines its value. We both spent the whole day making it. I propose that we both get 50 bucks and then we sell the one pair of shoes."
> And then regardless of who the student is or what their political beliefs are, by the way, they always turn down that offer. They immediately say, "No way, you're not getting $50 for this." And I say, "Well, explain to me why you feel that that's the case." And then they say, "Well, I have all negotiation power because they're 98 other people in the class that I could go to for a left shoe. I have the thing in short supply, you have the thing in large supply. So who gets all the rents?" Then I say, "Well, how much do you think the person with the right shoe gets?" And invariably the class comes to the conclusion that it's somewhere between 99 and a hundred dollars, so that almost everything goes to the person who has the one right shoe.
> And so after saying that, I say to them, "Well, to do investment management, I need two inputs. Instead of the left and the right shoe. I need investible money and I need mutual fund managers skill. Now tell me which one of the two is in short supply." And so very quickly they come to the conclusion that having investible money makes you in no way special, because everybody has investible money. And so it's very difficult to call that a skill in short supply. The skill of the manager is something that is in short supply. Who is going to go home with the rents from this process? Just like the right shoe owner, they go home with everything, the manager goes home with everything. And so the value added is entirely absorbed by the manager in terms of fees. Which by the way is exactly the same reason for why the net alpha is zero. Because in this left and right shoe example, the net alpha is the amount of money the left shoe owner goes home with.
I forget the name of the yt channel, but they did an interesting interview with Vanguard reps. The reps said that active funds will often need to liquidate assets they will sell at a discount to an index fund directly that will buy it anyway. They don't want to sell to the public market as that would reduce the value of their assets still on the books. In this way a passive fund can take advantage of an active fund and is one of the reasons why many active funds struggle to beat a passive one year after year.
For value funds, price-earnings ratio, price-to-sales ratio, and indeed dividend yields are indicators commonly used for scoring (there's also price-to-book, but that's a bit unfair to tech companies). Even when the fund doesn't use yields, it's an easily accessible proxy metric most of the time.
More importantly, all of these things aforementioned companies score terribly at.
N.b. I wouldn’t recommend it for various reasons, but it exists.
New-technology bubbles have been a thing before retirement savings were even invented:
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
presently the Mag 7 alone make up 33% of the S&P500 total market cap
in 2007, the _entire_ S&P Financials sector (banks, insurers like AIG, brokerages, real estate firms) was only about 22% of the S&P500; the top 10 banks (with Lehman at #10) only made up 9%.
the S&P500 is now a dangerously non-diversified asset but still used by retirement savings inventors as a diversified one
The argument is that retirement savings are being invested in different ways than before.
The defining thing about "high risk" is that risk part will happen and that creates a lot of loosers. That is the whole point!
But HN treats "high risk" as something that is expected to always give you reward.
The main reason we are seeing private equity now being offered in 401ks isn't that it's going to be great returns for your average mostly-self-directed worker, but because those managing private equity believe they will make more money if they managed more capital. There's no guarantee that they are making any choices there that provide good risk-adjusted returns. But the managers sure would be making more on fees.
> the $15 trillion held in private sector workers’ retirement accounts is now, for the first time in history, available to be invested in private funds.
The article acts as if this means there are $15T of funds that Coreweave can tap into at will, but all this means is that 401k plan admins are allowed to add private equity to the list of options in 401ks. I expect quite a small percent of plan participants to actually make use of said options even IF they are added, unless plan admins start changing the default investments to include them. Not saying that can't happen, but it hasn't happened yet.
Your 401K is invested however you choose, but the people with pension plans don't get any input on how those are invested or what risks they take. They have historically been cesspools of fraud and shady deals.
Note: you have to go out of your way. to make this happen. Most funds prefer to dump everything together, so they don’t have to make individual tough decisions.
edit: i'd like to see a situation where an employee's private 401k is liberalized to the point where we can select not just the offerings but the offeree.
Unless you want to claim that all your assets eventually become retirement assets... but then it's vacuous.