Friday, January 07, 2005

Is the stock market gambling?

"Analysts expect such plans to be fought strenuously by California's labor unions. "Unfortunately, Gov. Schwarzenegger's proposal to turn public employee pensions into stock market crapshoots should come as no surprise," said J.J. Jelinic, president of the California State Employees Association, a union representing 140,000 state workers. "

This has been a constant criticism of the new social security plan that Bush is putting forward and the plan that Schwarzenegger is putting forward. The number of workers with money is 401k's or similar type plans is around 60 percent, if i remember correctly. I would agree that putting money in a single companies stock is gambling, though i would consider it lower risk than betting at a casino. It is putting your money where your mouth is. The same basic principle of picking a horse or a team.

When investing is generalized across several stocks, as in a mutual fund, it is still putting your faith in the American economic system. You as an investor are basically betting on America (this is excepting international funds). I think that is the problem that many on the left have: Buying American mutual funds is betting on America.

""Defined contribution plans tend to do worse than defined benefit plans because most of us, unfortunately, tend to make poorly informed investment decisions," he said. "

Oh yea and do not forget, you are to dumb to save for retirement argument. That is why you use a mutual fund or a government bonds, you let someone else to the hard work.

Of course i would love to see where the money is of the people who criticize stocks as gambling.


1 comment:

Anonymous said...

I don't see anything wrong with online gambling as long as their are safeguards in place to protect problem gamblers. When you play online, you can play at your own pace, with no noise, no smoking, and lower stakes.