The Stock Market Push of the 90s: A Way to Rob the Middle Class?

Hello.

The middle class was pushed by every large investment house, banks, and personal finance guru in the late 90s to get their savings into the stock market.

IMO, this was nothing but a way to take the money of the middle class and distribute it to the wealthy. Socialism for the rich.

The stock market is a gamble. It has always been a high stakes poker game. If you have ever tried to play poker with a few rich guys you know that your meager pile of chips will not last. You may win a few hands, make a few bucks, but in the end you will lose. This is how casinos make money. The guys with the most chips can handle the upturns and downturns of luck. But in the end, they will take your money.

As the market has gone down in the last few months and the jobless rate has risen, the middle class have sold out all of their holding and 401k earning at a fraction of the price they paid for them. Today you see a large rise in the market as the wealthy by up all your shares for low prices. They had the money, and they could stay in the game.

Ret

This thread has some good information which backs up this idea:

brane-space.blogspot.com...

Yes, yes, I see where you're coming from. I've considered similar, and very much in particular recently with the crash. I find it interesting that, our government here has a push campaign for more spending, ie, to keep the economy in good shape (which, I understand the concept but, I have an uneasy feeeling..)

Also, I was thinking how, while the market is down, there's a lot of average-class people talking about getting in while it's low. But I reckon the market's not going anywhere this time.

I can't help but suspect this is all a way of draining the last remaining dollars from our accounts. We may to then take the number on our hand and forehead.

Of course though, this is pure speculation.

reply to post by retzius


I've been wondering this exact same thing lately. My smoking gun, as it is, to support this idea is actually these yo-yo days like today where the market suddenly balloons. I think that we're seeing an activity almost like shaking an almost empty ketchup bottle or shaking up an almost empty can of spray paint. These "enticement" days like today are an effort to get the last holdouts with money who are considering investing because "Oh good, it's hit the bottom!" to jump in before a choreographed huge plunge that will effectively strip them of whatever they invested.

It really is an incredible scam. We have a market with "trillions in wealth" of which the vast majority is based on money that doesn't even exist and we have banks and megacorporations who are going to end up walking away from this with more tangible wealth than they had before the makret started declining. Meanwhile, the middle class is watching their retirements evaporate, their homes repossessed, their jobs lost, and to top it all off we've helplessly watched as our kids' futures were hijacked to further compensate Wall Street above and beyond what they already stole from us.

What I find more astounding is that there is evidence now that the banks given money from the 700 billion stimulus package have decided to NOT use the money to start loaning again to the middle class, as they promised.

groups.google.com...

They are either sitting on it for a rainy day or, in many cases, uses the money to buy up low value stocks like today or to buy out other banks.

I have never seen this level of greed. It is not the normal level of self protective selfishness.

It is true evil in a way that I have never seen before.

There is no sense of patriotism here, no sense of community, no sense of altruism.

Ret

May I also add, that the wealthy have access to information. Meaning, the are informed as to when to pull out of the market.

If the majority of cash is held in the hands of only a few, and not really circulating, would this negate the value of cash, as we now know it? If it's not being exchanged, then its no longer serving its initial purpose.

All steps toward a cashless society.

Actually if you had invested at the top of the market in 2000 in a diversified portfolio of small, md and large company stocks, you would have made 18% as of Sept 31, 2008. Since then you would have lost most of your profits. So through two major declines in 8 years, an investor in this portfolio would not have made any money, but yet they would not have lost any money. Considering the upside that owning america's greatest companies can give you. Break even was not a bad result given the turbulence and the negative bias the market has gotten through most of this period. Portfolio I am using is in this evaluation is 30% IVV. 30% OEF, 20% IJH, 20% IJR. All of these are S&P equity index funds.

If you had owned the same portfolio and wrote 10% out of the money calls against your position each month you would have made 50-60% during this time. better than almost any other asset class during this timeframe.

Originally posted by sasss
May I also add, that the wealthy have access to information. Meaning, the are informed as to when to pull out of the market.

How about a source for your allegation please.

A few points about the 401k losses:

1. Each 401k plan has different investment choices based on risk. If you are risk averse, either leave your contributions in cash or put them into a bond fun.
2. You only lose if you sell. Those selling right now are either doing so stupidly out of sheer panic; or they need the money now. If they need the money now (or soon), then shame on them for not shuffling their investments to lower-risk vehicles at this point in their lives.
3. This sounds like a democratic playbook ploy. "You can't manage your money, let the govt do it for you." Ironically, it's being reported that numerous members of congress increased their wealth in 2007.



[edit on 10/28/2008 by titian]

Originally posted by disgustedbyhumanity
Actually if you had invested at the top of the market in 2000 in a diversified portfolio of small, md and large company stocks, you would have made 18% as of Sept 31, 2008. Since then you would have lost most of your profits. So through two major declines in 8 years, an investor in this portfolio would not have made any money, but yet they would not have lost any money.

> Im sorry but you have to consider the middle class American and how they bought these stocks. They bought them with retirement money and/or 401k assets. Most Americans do not have enough cash outlay or market time to recover that blow to their retirement fund. Lastly, most Americans dont have enough money for a "diverse portfolio" of different assets.

Considering the upside that owning america's greatest companies can give you. Break even was not a bad result given the turbulence and the negative bias the market has gotten through most of this period. Portfolio I am using is in this evaluation is 30% IVV. 30% OEF, 20% IJH, 20% IJR. All of these are S&P equity index funds.

If you had owned the same portfolio and wrote 10% out of the money calls against your position each month you would have made 50-60% during this time. better than almost any other asset class during this timeframe.

> Again, you have to read into the inherent elitism in your statement. I am talking about normal "middle class" Americans. Preoccupied with Monday Night Football and Dancing With the Stars. It was far too easy for them to get into the market without a true understanding of how it functions and the consequences of a non-diversified portfolio. It was presented to them as a "retirement fund" that was "invest and forget it"

Ret

Originally posted by retzius
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> Im sorry but you have to consider the middle class American and how they bought these stocks. They bought them with retirement money and/or 401k assets. Most Americans do not have enough cash outlay or market time to recover that blow to their retirement fund. Lastly, most Americans dont have enough money for a "diverse portfolio" of different assets.

> Again, you have to read into the inherent elitism in your statement. I am talking about normal "middle class" Americans. Preoccupied with Monday Night Football and Dancing With the Stars. It was far too easy for them to get into the market without a true understanding of how it functions and the consequences of a non-diversified portfolio. It was presented to them as a "retirement fund" that was "invest and forget it"

Ret

Most every 401K has asset allocation models to help the employees. Most 401k's do not allow individual stock ownership. Most allocations are more conservative than what I laid out. So factually the middle class has not been robbed of their 401k's. And if they have been investing since the late 90's thay are still doing pretty good when looked at in the whole.

I was actually just making a general - meaning, information is sure to circulate amongst the inner peer group first, before it's announced officially to the broader community.