I commend my Readers to examine this article, one viewpoint of American society. The message in the piece is remarkably truthful, and the gullibility of Investors comes from an adroit use of propaganda by financiers. Let me present another truthful scene, but one that may make it more understandable to the Reader. Laboring classes have been told for decades that they had to purchase a piece of the American economy in order to achieve Wealth. Under tutelage from Wall Street which extends even into Grade Schools, American labor made a grand, huge entrance into the World of Finance. They were the Country yokels. Wall Street enticed them to invest huge amounts of Cash, from which Wall Street drained immediate Profits for themselves. Everyone knows laborers invest to Save for their retirement; a dream world where all things turn out well, and Everyone gets to act like a semi-millionaire. It is a program promised to work at all times, with repetitious renditions that Stock prices have increased almost continually since the Great Depression. Every Discontinuity of that rise in Stock pricing is excused as Recessionary pressures, and long-term investment will smooth over the losses to the advantage of the Investor.
The above Statement was the propaganda; now, We can attempt a greater reality. There is a Point in the future where labor will want to pull funds from their investments; in order to finance that wonderful retirement of which We all dream. Here comes the first difficulty: the fact that Stock prices have been increasing simply because Money has been flowing into the markets; attempts at too rapid Withdrawal of such funds has been the major source of those discontinuities of Stock pricing aforementioned. There is some disagreement about this factor, but there is factual evidence that funds are actually withdrawn faster than they were initially saved; resulting from a relative desire to maintain parity with Spending practices held during their Work lives. It is known that Retirement is basically based upon the birth rates some 65 years before, and that there are massive Retirement cadres coming, backed by reduced levels of labor behind them. It can be proven that an outflow of Cash from the Markets lead to decreasing Stock prices, and that reversal of Income flow is coming successively over the next decade. Wall Street will continue to do well, based upon their up-front fees, but Stock prices are in for a very difficult passage.
The Baby Boomers are faced with a reality which is extremely uncomfortable. They cannot pull their funds from the Markets without real loss of invested value of their holdings. They cannot finance their Retirement programs without withdrawal of those funds. It is in many ways the reverse of mortgage finance. There is gain from buying positions in the market, though there is loss in selling positions in the market; in both mortgage and investment, it is hard to get Cash for the value of the possession. Retirees are about to find the demon existent in their Stock portfolios; Cashing Out means Crashing Out. Be careful of the Gold Brick that has a Credit Default Swap attached to assure validity. lgl