Labor Secretary Alexander Acosta leaves open the possibility his department may revise or scrap the rule after its review is complete
.. The Labor Department’s landmark retirement-savings rule is set to take effect in 2½ weeks, a move that underscores the difficulty the Trump administration is encountering in undoing Obama-era financial regulations... The Obama administration said conflicted financial advice costs American families $17 billion a year and pushes down annual returns on retirement savings by a percentage point... Some brokerages have already moved to solidify their compliance plans for retirement savers. J.P. Morgan Chase & Co., for example, will now move forward with its plans to shift wealth-management clients who pay commissions in IRAs to either a self-directed option or its fee-based platform .... Ms. Sweeney, the regulation saves investors $147 million every 60 days.
Amazon’s 49,000% Gain: The Most ‘Super’ of ‘Superstocks’ Since 1926
only 0.33% of all companies that were part of the U.S. stock market at any point over those nine decades accounted for half of all the wealth generated for investors. And fewer than 1.1% of all the stocks that existed created three-quarters of the stock market’s cumulative dollar gains — as measured relative to the returns on cash.
Without such “superstocks,” as financial adviser William Bernstein has called them, the stock market wouldn’t have been worth owning at all. The 1,000 top performers since 1926 — under 4% of all stocks — account for all the stock market’s gains, Prof. Bessembinder’s research shows. You could have matched the returns of all the other 96% of stocks combined by putting your money in one-month U.S. Treasury bills.
What Is a Good Return on Your Investments?
- Cash: Fiat currencies are designed to depreciate in value over time. In fact, $100 in 1800 is worth only $8 today, representing a loss of 92% of value. Burying cash in coffee cans in your yard is a terrible long-term investing plan. If it manages to survive the elements, it will still be worthless given enough time.
- Bonds: Historically, good, quality bonds tend to return 2% to 4% after inflation in normal circumstances.
- Business Ownership, Including Stocks: Looking at what people expect from their business ownership, it is amazing how consistent human nature can be. The highest quality, safest, most stable dividend-paying stocks have tended to return 7% in real, inflation-adjusted returns to owners for centuries. That seems to be the figure that makes people willing to part with their money for the hope of more money tomorrow. Thus, if you live in a world of 3% inflation, you would expect a 10% rate of return (7% real return + 3% inflation = 10% nominal return).
Investors have a hard time looking the truth square in the face
Psychologists call this behavior “information avoidance.” You could also call it intentional ignorance.
“It’s a motivated decision to say ‘no’ to learning available but unwanted information,” says Jennifer Howell, a psychologist at Ohio University in Athens, Ohio, who studies the phenomenon. “People avoid information if it’s going to make them feel or behave or think in a way they don’t want to” — especially any evidence that could jeopardize their belief in their competence and autonomy or could require taking difficult or prolonged action.
.. investors check the value of their financial assets much less frequently, on average, in down markets — a behavior the researchers call “the ostrich effect.”
.. you can’t tell whether your ideas are valid unless you let them be challenged.
Just as the most partisan voters — of all stripes — shouldn’t remain deaf and blind to evidence that their favorite politicians might be wrong, investors would spare themselves embarrassment and loss by confronting information instead of hiding from it.
.. Finally ask: What conditions or circumstances would it take for me to be proven wrong? If your answer is “none” or “that’s impossible,” you have a severe case of information avoidance. The only cure for that might be the shock of losses that come at you like a bolt from the blue.