Gary Allen on Business – Sunday, March 12, 2017 – Podcast Now Available

The Good Old Days

Good Old Days_ManI often hear about the good old days when everyone in the land had a pension that lasted a lifetime. These good old days come up when people complain about 401(k) plans and how they have failed America. However, were the good old days really that good? I don’t profess to have all the answers, but this memory of the good old days seems to be a bit hazy at best. 

First of all, only about half of American workers were covered by pensions. This is hardly comforting to the other half that did not have a pension. And on top of that, just how secure are those old pensions? The answer right now is a big shakier than many remember. Those old pensions are still the same pensions we are living with today. 

The reality is many of those pensions are significantly underfunded. The problem of under-funding is present in public and private pension systems. And the scary thing is the PBGC, which is the safety net behind pensions is also running out of money.

In the first segment of the program, I cover the current health of the pension system in the United States. Don’t worry, it can be fixed, but it is going to take a lot of effort and sacrifice.

KryptoniteIn segment two, I cover the exciting topic of the fine print. Investment disclosures are something that everyone struggles with. There have been many attempts at trying to develop more effective and simpler disclosures but it does not seem to matter. For whatever reason, disclosures appear to contain some kind of fatal dose of Kryptonite that renders investors oblivious to the risks involved. Unfortunately, I don’t have any simple answer to fix this problem. Caveat emptor still reigns supreme when it comes to purchasing investments.

In segment three, I respond to an excellent question from podcast listener Randy. He had a great question about when is it appropriate to invest in a stable value fund. Most listeners know, I am not a fan of stable value funds, but sometimes you don’t have much choice.

Finally, in segment four, in the remaining time I have, I cover some of the issues or problems that I see with stable value funds. The perceived safety and guarantee of stable value funds make them very attractive to retirement plan participants. It is my opinion that most people would do better if they did not commit their savings to these high cost, low return vehicles.   

It was the dreaded spring-forward Daylight Savings Time weekend… so I know many of you may have missed the broadcast. That’s why we have this podcast. I hope you enjoy the program – Gary 

CONTACT INFORMATION

If you have a question for Gary or would like to chat with him, the best way is to contact him through email. Gary’s Email  gallen@prudentllc.com.

If you are not the emailing type, you can always try to reach him via telephone at 916.436.8331.

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Gary Allen on Business – Sunday, March 5, 2017 – Podcast Now Available

The Health of the US Stock Market

Where Have All The Public Companies Gone?

Business man

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 gallen@prudentllc.com. You can try to reach him at his office, but he is often on the move! 916.436.8331.

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