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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: re3 who wrote (1240)	5/14/2003 12:10:37 PM
From: GraceZ	Respond to of 4907

I have to admit being a pension actuary was a pretty sexy job there for a while because the profit potential released to the company when you moved around a few numbers was huge as these companies grew their pension funds to gigantic sizes. Needless to say, the assumptions were picked out from a time period when they were accurate and they worked for a long time. You know yourself, how different assets perform in comparison can vary widely when you are careful about the time frame. Now they will over-correct in the opposite direction which will have some of the same distorting effects on the stock market. When indexing became popular everyone was sort of heralding it as the be all, end all, that if a zillion active money managers couldn't beat the indices why not just buy the index...so then you have money dumbly flowing in which of course, was a self fulfilling prophecy for far longer then I thought it would be. I thought indexing was one of the more dangerous things to hit the market. But, I actually think it was done in the spirit of giving people better returns, not stealing their money, as flawed as the concept appears to be now. A lot of the pension assumptions were based on the historical performance of those same indices even though EVERYBODY knows that past performance doesn't dictate future returns. Problem is that people were/are just so bad at guessing the future, they did better on auto pilot for a long time. I was aware from an early age that I could beat the index in a small port, that it was relatively easy even while its next to impossible in a huge mutual fund. I also knew I wanted to handle my own investments and retirement, not trust that to a company to take care of for me. I think everyone should have a self directed portable retirement/savings account that isn't tied to their job (as well as their own health insurance) just because so few companies last long enough to insure they'll be there when you do finally stop working. The problem is that when someone hands that function over to someone else, like the company they work for, they can never be sure that their interests and those of the company's are aligned. This is where the guaranteed existence fails. You always have to ask, guaranteed by whom?