Poll:Wall Street Scandals and investing

[bondi688]

Did the strings of Wall Street Scandals: e.g. SAC insider trading, Goldman Sachs touting mortgage backed securities to investors while actively shorting them in the company's private accounts, affect your willingness to invest in stocks, bonds and other financial vehicles?

1. I lost all faith in those crooks, and will cut back on investing in those vehicles.

OR

2. Those underhanded activities have been there since the beginning. It makes no difference in my own investment style and plans.

+++ I tried to put this in as a poll. I thought I followed the instruction, but in my clumsy way, mess it up+++

 

[LazyErik]

I think my opinion is more with the second option. Rich "in the know" cheaters will always cheat. It's been that way since the beginning. I feel like the individual investor can only index and pick a few stocks to hold long term (if this is their hobby & willing to take the risk.)
JMHO, I have no problem being proved wrong.

 

[ERD50]

Did the strings of Wall Street Scandals: e.g. SAC insider trading, Goldman Sachs touting mortgage backed securities to investors while actively shorting them in the company's private accounts, affect your willingness to invest in stocks, bonds and other financial vehicles?

No.

1. I lost all faith in those crooks, and will cut back on investing in those vehicles.

I don't have any faith in them at any time. I can't lose something I never had.

2. Those underhanded activities have been there since the beginning. It makes no difference in my own investment style and plans.

So what are you doing?

-ERD50

 

[bondi688]

I asked the question after reading comments from Posters in sites like Yahoo about today's news Tourre was found liable for fraud. There, the sentiment is overwhelming anti-Wall Street, anti-Bank, and that investment industry is a shell game.

 

[jollystomper]

I'm more towards option 2, but due to those scandals I'm less likely to invest in individual stocks/bonds and continue to use mutual funds and ETFs (and primarily of the index variety).

I own about 10 individual stocks but only at the "gambling money" level. My view is it is tougher for those scandals to impact mutual funds, particularly fund companies with solid reputations.

The sayings "never invest in something you don't understand" and "if someone promises you a great return be wary" were never more true.

 

[W2R]

+++ I tried to put this in as a poll. I thought I followed the instruction, but in my clumsy way, mess it up+++

I added a poll, and hope it is what you wanted. If not, any mod/admin can change or delete it.

 

[bondi688]

Thanks. W2R. I was trying to gauge whether the people who frequent this forum has a different reaction to all the scandals when compared to the general public who post in sites like Yahoo.

 

[meierlde]

I guess the real issue is the time frame, if you follow Boogle, a lot of the schemes and shenanigans cancel out with the passage of time. (Of course Boogle would also say that going with CDOs and the like was asking to be taken to the cleaners). For example I think that HFT hurts someone with a few months time horizion, but if you go to years, then the fluctuations even out. Plus what other game is there in town to play?

 

[ERD50]

I asked the question after reading comments from Posters in sites like Yahoo about today's news Tourre was found liable for fraud. There, the sentiment is overwhelming anti-Wall Street, anti-Bank, and that investment industry is a shell game.

O...........Kay.

Here's a link to a chart of a Total Stock Market Index fund, and there are many like this.

https://personal.vanguard.com/us/FundsSnapshot?FundId=0085&FundIntExt=INT

If you invested money in this ten years ago, it would have more than doubled. That is after all expenses, fees, etc. But you may have taxes due if you sell. It is available to anyone with the $3,000 to start. Some similar funds have lower minimums.

So where is the fraud, where is the shell game? Did you set them straight? Have those posters to Yahoo found a good alternative to investing in businesses? Do they have any real experience with investing?

Stay away from the Bernie Madoff 'too good to be true' stories, and stick with mainstream index/ETF products, or a diversified portfolio of quality stocks, and you will likely do well.

So what do you think about all this? How do you invest?

-ERD50

 

[harley]

Thanks. W2R. I was trying to gauge whether the people who frequent this forum has a different reaction to all the scandals when compared to the general public who post in sites like Yahoo.

Yes.

 

[ERD50]

OK, I see the poll is up now. I won't choose either answer.

I think that today we have more transparency than ever before. Lower fees, better reporting, instant pricing available. What 'underhanded activities'? If those are 'underhanded activities', they better keep working at it - they aren't very good if they are giving people more than double their money in ten years. They were supposed to keep it all for themselves! Back to the drawing board!

-ERD50

 

[bondi688]

ERD50

An example of underhanded activities is when Goldman Sachs touted and sold mortgage backed securities to its clients in 2007-8, at the same time the company actively but secretly shorted those securities with its own private funds. Another example was with crude oil in 2008: while publicly, GS's analysts were predicting oil will go to $200 a barrel on TV and in research report, and the company was shorting oil at that time.

I think insiders gaming the system had been there since the beginning when commercial activities began, but their crooked dealings represents a very small proportion of the market. And if we invest in mutual funds or indexes, like meirilde said, over time those dirty deeds would have little effects.

The follow up question is: when the general public "over-react", that put pressure on politicians to bring in more and more regulations, some may be good, but some amay be counter-productive.

 

[ERD50]

ERD50

An example of underhanded activities is when Goldman Sachs touted and sold mortgage backed securities to its clients in 2007-8, at the same time the company actively but secretly shorted those securities with its own private funds. ...

How does that affect the average small investor? Yes, that was a part of what rattled the markets at that time, but real investors look long-term, and even ten years is not very long, and a simple investment in an index fund has more than doubled, even with the G-S fiasco.

So let them stay out the market and miss these 10 year doublings. Then they'll complain that everyone else got rich and it isn't fair that they didn't, it was all rigged, the sun got in their eyes, etc. and we should share with them.

-ERD50

 

[bondi688]

ERD50
Did you read the second paragraph of my comment (#12)? Was I not saying what you just said?

 

[ERD50]

ERD50
Did you read the second paragraph of my comment (#12)? Was I not saying what you just said?

Yes, pretty much, but what are those Yahoo posters thinking?


-ERD50

 

[bondi688]

ERD50
At the risk of over-simplification, the sentiment, mistrust, misjudgement and financial naivety of some of those general public landed them in a situation of facing the future and retirement with no invested assets and little savings.

 

[clifp]

I think the Yahoo poster represent a majority of Americans. Hell my own sister just told me last week that she thinks Wall St is just a casino, this despite her being married for 30+ years to a very savvy investor, who has done quite well for them.

I just rolled my eyes and agreed with her husband.

 

[foxfirev5]

It might be rigged but it's the only game in town. Keep it simple with low ER Index funds and a little faith in the system.

 

[Which Roger]

OK, I see the poll is up now. I won't choose either answer.

I think that today we have more transparency than ever before. Lower fees, better reporting, instant pricing available. What 'underhanded activities'? If those are 'underhanded activities', they better keep working at it - they aren't very good if they are giving people more than double their money in ten years. They were supposed to keep it all for themselves! Back to the drawing board!

-ERD50

+1
I think there are fewer shenanigans going on with Wall Street than in the old days. But, their impact is magnified because we hear every detail of every news item instantly these days, and more people are invested in the stock market than a generation or two ago.

 

[Midpack]

A rant disguised as a poll. You can point to crooks in any field/sector/industry/avocation, including whatever field the OP was/is part of...caveat emptor.

 

[bondi688]

A rant disguised as a poll. You can point to crooks in any field/sector/industry/avocation, including whatever field the OP was/is part of...caveat emptor.

I am awed by your ability to mind-read and divined the purpose of my poll.

 

[bUU]

What makes the least sense to me is the idea that assuming they do what they're accused up (and I'm not disputing that) that that somehow leads to the conclusion that one would be better off not investing. If you live in the Republica of Fardonia, and thugs extract protection money from people who sell their wares at the market, that doesn't necessarily mean that you're better off selling your wares from your home. The advantage of the market may be superior enough to overcome the cost of corruption.

 

[ERD50]

A rant disguised as a poll. ....

Yes, I'm confused as to the OP's intent. Is he agreeing with the yahoo posters, or just pointing out that this particular subset of the population (and who knows what segment these yahoo posters represent?) thinks in this way? Is it significant? I can find all sorts of various comments on any subject.

ERD50
At the risk of over-simplification, the sentiment, mistrust, misjudgement and financial naivety of some of those general public landed them in a situation of facing the future and retirement with no invested assets and little savings.

Well, if someone doesn't bother to educate themselves, and then applies unfounded, emotional, knee-jerk reactions to their investments (or lack of them, out of 'fear'?), then what should we expect?

Is there some Constitutional right to having a big savings account? I don't think so. It's something that one has to work for (barring lottery, inheritance, etc). In order to have the account I have today, I had to face some risks. I didn't sell out at the lows, I didn't jump in at the highs. I had to LBYM and pump money into my accounts.

The general public has lots of very simple options, if they took 30 minutes to educate themselves. Put away some percentage of your salary into a target retirement fund. Ignore it. The more they can put in the better. They'll be far better off if they do that, and it isn't rocket science.

-ERD50

 

[bondi688]

ERD50
"that this particular subset of the population (and who knows what segment these yahoo posters represent?) thinks in this way? Is it significant? I can find all sorts of various comments on any subject."

While those reactions may not be wise or correct, if they are voiced by enough people, it can become a popular opinion. Elections are won by a politician who wins the most number of votes.

read my comment (#12), after correcting my typos:
"when the general public "over-react", that may put pressure on politicians to bring in more and more regulations, some may be good, but some may be counter-productive."

 

[ERD50]

ERD50
read my comment (#12), after correcting typos:
"when the general public "over-react", that may put pressure on politicians to bring in more and more regulations, some may be good, but some may be counter-productive."

OK, so is that what you want to discuss? It looks like I'm not the only one who is confused about what the intent of this thread is.

But to that point, I totally agree that some vocal group can put pressure on politicians to enact laws/regs that are counterproductive. It happens all the time, and I could go on and on, but it wouldn't be long before I was banned.

So do you have some specific concerns about specific laws/regs that are being proposed that could affect us FIRE or FIRE hopefuls? If not, it does kinda come across as a rant, intentional or not.

-ERD50