The Health of the US Stock Market
Where Have All The Public Companies Gone?
On the program this week, I talk about the concerns raised by a trio of professors regarding the health of capitalism in the United States. The professors are calling into question one of the basic tenets of capitalism, the idea of creative destruction. Their argument is America is headed towards a system of winner take all. This is where large companies continue to gain market share and dominate their industry. They argue the primary cause for this is a lack of anti-trust regulation and enforcement. In the first segment of the program, I give you my thoughts on why I think they are off base with this argument. HINT – I think it is a byproduct of the artificially low interest rates that we have experienced for a decade.
Here is a link to the article by Jason Zweig that I mentioned at the beginning of the segment. Jason Zweig Article
In segment two, I spend time talking about one of the few initial public offerings in recent months. Snap Inc. of Snap Chat fame enjoyed a snap, crackle and pop opening (who could resist) on its public debut.
Segment three is another take on the “success” of the Snap IPO. Why does Wall Street continue to dominate the IPO process and the pricing structure? Snap, which burns money at an incredible rate, sure could have used an extra billion dollars that Wall Street passed on to its best clients by pricing the IPO below what the public market would pay just a few minutes later.
Finally, in segment four, I cover, what in my opinion is one of the worst investments for most retirement plan savers. The funds are called many things, but they are commonly known as Stable Value Funds. I believe that most people would reject this investment if they truly understood how it worked. Let me put it to you another way. Would you be interested in an investment where you lock in a low rate of return and give up approximately 75% of the profit that your money generates? It is called spread income and it is not disclosed anywhere to retirement plan participants (Employees) or plan sponsors (Employer). Spread income makes Stable Value Funds the most profitable portion of a retirement plan vendor’s business. And that profit comes at your expense!
I hope you enjoy this week’s program! – Gary
Gary’s Contact Information
If you would like to contact Gary about your financial situation, the best way to reach him is via email at Gary’s Email firstname.lastname@example.org. You can try to reach him at his office, but he is often on the move! 916.436.8331.