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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (214587)	1/11/2005 2:36:02 AM
From: tejek	Respond to of 1572712

Lord have mercy. Teaching finance to the uneducated is pretty frustrating. But I'll give it a shot. Stay with me, Raymond. You become more like DR with each passing day.

To: RetiredNow who wrote (214587)	1/11/2005 3:01:02 AM
From: Raymond Duray	Read Replies (2) \| Respond to of 1572712

mindmeld, FWIW, I'm about 60 credits into a 120 credit MBA program. My GPA is 3.8 out of a possible 4.0. To call me ignorant is, to put it mildly, off the mark. We may disagree about economics or finance, but it is hardly because I'm a naif. Re: Why would any sane person not (gamble in the market)? Two reasons come immediately to mind. In the early 1980s, Margaret Thatcher privatized the British pension system. Broker overcharges, gouging, fees and chicanery were so severe that the Tories had to re-write the law within two years in order to curtail the outrageous rip-off of the general public. And more recently, the Swedish privatized and within one year, their stockmarket had swooned -68%. Let's work a hypothetical with the Swedish example. If you do the math, starting with a hypothetical $100,000 here's how this works out, assuming your average yearly 8% gain, except when reality has proved otherwise: Starting value: $100,000 End of year 1: 32,000 End of year 2: 34,560 (previous sum x 1.08) End of year 3: 37,324 4: 40,310 5: 43,535 6: 47,018 7: 50,779 8: 54,842 9: 59,229 10: 63,968 11: 69,085 12: 54,612 13: 80,581 14: 87,027 15: 93,990 16: 101,590 Whew! We made it. We're made whole again. But wait! Except that we haven't discounted for inflation. Say inflation runs, on average about 3% per annum. In that case, it will be over 30 years before your son is made whole. Holy cow. Such a deal.