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apteacher

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Everything posted by apteacher

  1. Read the quotation from the article: "After choosing the insurers, the union (NEA) designed certain annuities with them, negotiating the terms of the annuities, exclusively endorsing the annuities as favorable retirement savings vehicles, and aggressively marketing the annuities to union members. The union also monitored and managed the annuities for its participants. In exchange for the union's role in marketing the annuities, the insurers paid royalties of about $2 million per year to the union, took on the salaries of the union's member benefit corporation, a wholly owned subsidiary of the union, and contributed to the union's charitable foundations. The insurers also received fees from investment companies whose mutual funds were made available through the annuities. The union did not fully disclose to its members the nature or amount of the payments it received from the insurers or the fact that the insurers received payments from the investment companies whose mutual funds were included in the annuities. Instead, the union marketed the annuities as the most favorable retirement option for its members, despite the fact that the annuities charged fees that were as much as ten times those charged on comparable annuity contracts." NEA may have won the lawsuit, but it has egg all over its face.
  2. Fidelity Spartan expense ratios: Total Stock Market: .10% Total International Stock Market: .20% Total Bond Index: .22% I have all three of these, as does my wife.
  3. so why does Horace Mann sell these variable annuities to teachers in there 40's? To make money.
  4. Fidelity's Spartan funds are among the lowest around. Fidelity just added its former US Bond Index fund to the Spartan lineup, and reduced the expense ratio to .22.
  5. I just received a Cal STRS publication that included the fund's returns over the last ten years: Cal STRS returns: 2.5% Benchmark returns: 2.5% There's another argument for indexing. All of that money devoted to paying the best and the brightest for their investment acumen and ... the investment geniuses could not beat their benchmarks.
  6. I have no idea what my 403b return was this year. Why? Because it is spread out among several different providers. Why? Because the offerings provided by my district have changed over the years. Consequently, I have 403b accounts with Fidelity, Vanguard, and (ugh!) Great American Life. I would make an educated guess that the overall return was about 8-9%. I have a 40-60 asset allocation, and I am satisfied with this year's returns. I won't be entirely satisfied until the Dow breaks through the 14,000 level it had reached in 2007. Those folks who are happy about the last two years' returns are overlooking the collapse of stock prices from the 2007 highs. I am still upset over that collapse, although I have continued to maximize my 403b contributions through dollar cost averaging. It has been difficult to stay the course in the past decade, but I have done so nonetheless.
  7. OK, Tony, you got me! The author falls prey to the cause and effect fallacy. It's not at all clear that high taxes are what make people in these countries happy. There are all sorts of cultural explanations that help to explain the happiness in these countries, which are very, very different than the US. Happy New Year, Tony. I wish you and everyone else a prosperous 2011.
  8. Steve, As my posts indicate, yes, I am pretty bitter. I have developed a pretty conservative portfolio allocation (40-60), and yet the hammer continues to fall. I think that the bitterness goes beyond investing, though. I feel as if I'm getting the double whammy: declining markets and increasing responsibility for the well-being of others. But that's getting into the political realm, and I don't think I'll go there on this forum.
  9. - My bond allocation has ranged from 40% earlier in the decade to the current level of 60%. Bonds, to be sure, have provided somewhat of a cushion for my portfolio, but the stock market losses have overwhelmed the bond gains. And I'm just waiting for bonds to get hammered when interest rates rise from their record lows. - What am I going to do going forward? Just what I am doing now: no load index funds, broad diversification, dollar cost averaging, maximizing 403b contributions -- all of the "right" things that got me nowhere for the last ten years. I have totally bought into the "stay the course" Kool Aid, much to the regret of my portfolio. I know that markets have ups and downs in the short run, but how does one define "short run?" Ten years is a pretty long "short run."
  10. Are there any other idiots like me out there who continue to maximize their 403b plans, contribute to an IRA, invest in a broad mix of no load index funds that are appropriate for one's level of risk, and dollar-cost average through thick and thin? Or is it just me who went to Jonestown and drank the Kool Aid for the past ten years?
  11. "If there is anything that mutual fund investors have learned during the volatile past decade, it's that the past is not prologue. Between December 1999 and December 2009, U.S. stocks on the S&P 500 had an annualized total return of -0.9%. That's one of the four lowest for any decade in the past century and a far cry from the long-term average of 8.1%." I have great respect for Bogle, but following his advice (no load funds, broad diversification, index funds, dollar cost averaging) has been awful for me for the past ten years. Where has "doing all the right things" gotten me since 2000? Nowhere. Absolutely nowhere. I just laugh when I hear about "stock market recovery ... Dow Jones up to 10,400 ..." Do the morons who report this understand that the D-J is DOWN from a high of >14,000 a few years ago? This is a "recovery?" Give me a break. The cold, hard truth is that we would have all been better by just avoiding stocks and staying in cash the past ten years. People like me just drank in the Kool Aid of doing all the "right things." What a joke. Stocks are ~26% below what they were three years ago. Lord knows how long it will take for stocks just to reach their level of 2007, let alone actually going beyond that level. Does anyone else see a Japanization of the US?
  12. Wellesley is a fine fund; however, if you believe in the concept of establishing a certain mix of stocks, bonds and cash, this fund complicates matters because it has both stocks and bonds, as you have mentioned. A simpler solution would be: Vanguard Total US Stock Vanguard Total Bond Vanguard Total International Stock But heck, I feel like saying "What do I know?" when I look at investment returns of the past ten years. So the above allocation is sort of a standard response for low-cost indexers like me. I'm at the point where I have absolutely no confidence in what I'm doing. I'm doing all of the "right" things such as diversifying across different asset classes, using no load index funds, dollar-cost averaging, maximizing 403b contributions, but where the heck has it gotten me the last ten years?
  13. It's also important to note that the 2009 retirement class is a small fraction of the overall STRS retirement beneficiaries, the latter of which have a smaller pension benefit. In fact, those who retired years ago would have significantly less of a benefit than $4300 per month.
  14. Darn, if it weren't for all of those public workers who have those "lavish" pension, the enconomy would be terrific and there would be no state deficits. People wondered why we would go into a profession that demanded much in education and paid so little. Now those same people are screaming that we are making too much and our pensions are lavish. Steve Once the facts about STRS "lavish" pensions are presented, things look a little different. A while back you showed that the average STRS pension goes to someone who retired at about age 60-61, and was for the munificent amount of about $38,000. You are right on about this, Steve. Teachers are the whipping boys for California's fiscal woes.
  15. "But advisers have come to expect stellar performance from American Funds, particularly because it did so well after the market downturn in 2001, said Sonia Morris, a Morningstar analyst. “Advisers may have expected the same resilience in the last bear market, and they didn't get that,” she said." This is a good example of regression to the mean, and yet another argument for using index funds.
  16. Congress is seeking to "reform" investing? What a hoot. Congress cannot even balance its own budget, and yet it is trying to "help" investors. When Congress seeks to "reform" anything dealing with finance, reach for your wallets.
  17. Isn't that just wonderful news for an awful economy?
  18. Tony, Actually, I'm ticked off at both the Obama AND Bush administrations. Not all of the spending in the last ten years was to bail out the economy. Bush, for example, signed a bill adding ANOTHER benefit (prescript*on dr*gs) onto a Medicare program that was (and is) financially sicker than even Social Security. This had nothing to do with the financial downturn. And don't even get me started about how both administrations have supported the military messes in Iraq and Afghanistan. Lord knows how much money has been spent in these countries in the past nine years. Again, this had nothing to do with the financial downturn. I'm not at all convinced that the country would have gone to h*ll in a hand basket if the federal government had not engaged in the financial bailouts, but I understand that good people can disagree on that one. I am very concerned, though, that continual and massive federal deficits will bring about the very collapse to which you alluded.
  19. As usual, you bring excellent perspective, Steve. It was a good antidote to my worrying that "This time it's different and the markets won't recover." Still, I'm in a p*ssed off mood that the last ten years, in which I have been regularly investing, have been so bad. I feel like I have done the right things (index funds, no load funds, broad diversification, dollar cost averaging, maximizing my 403b contributions) with little to show for my efforts. It's been tough to stay the course, but that's what I continue to do. And I'm worried as heck that the bond markets (in which I'm 60% invested) will collapse with rising interest rates. And while I'm venting, I'd like to take a stab at the last two administrations, which have been on an obscene spending spree and put us into this debt mess. Fidel Castro was quoted as saying that, "History shall absolve me." I'd like to turn that around and say of the Bush and Obama administrations, "History shall condemn them." A pox on the Congress, too. Maybe even more so. There, that's better.
  20. A prediction: any reform on these fees will be watered down due to a full court press by industry lobbyists. It's a classic case of an arcane issue that will primarily attract the interest of the industry rather than consumers, who are oblivious. The SEC will respond accordingly. I may even use this example in my classes this year.
  21. This makes perfect sense. Investors who look for talented portfolio managers will flit from here to there like butterflies in search of the newest market beater. They will never be satisfied because it is virtually impossible to find someone who at one point or another will not fail to deliver the goods. Passive investors, on the other hand, don't have to sweat over portfolio managers. We do, unfortunately, have to sweat market results, and Lord knows, that has been difficult for the past ten years.
  22. But Steve, weren't the American Funds the same ones that salespeople plugged so much? Weren't these the funds that had deep, experienced, talented management that seemingly was above it all? Surely the salespeople couldn't have been wrong.
  23. Hi AP, I can understand your concern about the future of the bond market. As for myself, I am over 80% bonds now. I hold a diversity of bond funds. I know that when the interest rates go up, the value of my bonds funds will go down. However, I don't care because they will still continue to pay dividends. In time the dividends should go up as the bond funds acquire the higher interest bonds. I don't plan on selling any shares in my bonds funds, only use the dividends to supplement my income. My only concern would be if the bonds should default, then that would be a real loss. I bet, however, the lost won't anything like what we have seen recently in the equity market. Joe, This is sort of difficult for me to understand. Is the key thing to not sell the bond funds when the value declines, and instead simply take dividend distribution?
  24. I hear you too, but what are the options? Managed funds that predict downturns--I don't think so. Or managed funds that predict upturns--I don't think so. Annuities that never lose money, I don't think so. Sticking one's money under a mattress sometimes sounds appealing to me. Or simply depositing it in a bank. I'm not doing those things for my retirement accounts, but the frustration does get to me some time. I understand the long term horizon argument, but I'm reminded what Keynes said: In the long run we'll all be dead. That was one of the few things that Keynes got right.
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