Media in Trouble: All the news thats UNfit to print!: FactCheck points out an interesting FACT

"The information of the people at large can alone make them safe, as they are the sole depositary of our political and religious freedom." --Thomas Jefferson 1810

Monday, March 07, 2005

FactCheck points out an interesting FACT

Ok folks,

Fact that organization VP Dick made famous by giving the wrong URL during his debate with John Edwards last year has put out a new gem of a report about the costs of administering the private accounts in Bush's plan (the one that supposedly doesn't exist).

In attacking a liberal group fact check didn't count on the liberal group (CFA) attacking back.

If Factcheck is right, which some other folks have said they aren't, perhaps they have uncovered some craziness about the true costs of administering private accounts. However, in their rebuttal to the libs they make the following statement which really gets to the heart of the whole debate and rhetoric:
Finally, CAF states that our article "criticizes every report done about securities industry profits." And indeed, the new information we reported does call into question the two most widely quoted studies, which variously assumed that the industry would be getting anywhere between $3.50 and $80 on a $10,000 account. As we reported, the actual experience of the TSP turns out to be 16 cents, something not known before we posted our article. CAF also states that it cited figures from the Securities Industry Association, which is so. As we stated, however, CAF used the wrong SIA figure. As we said, CAF should have used a figure of $39 billion to the industry (over 75 years), the SIA's estimate of revenues to the industry from passively managed "index" funds. But instead, CAF used a figure of $279 billion, the SIA's estimate of 75-year revenues from a large number of actively managed funds, which Bush is not proposing. But as we pointed out, even the SIA's lower figure is based on what turns out to be a mistaken assumption that the industry would get $3.50 per year on a $10,000 account -- 22 times higher than the actual experience of the TSP.

So they are questioning a study that has been out there blah blah.

It is the actively managed part that cought my eye.

Active management is absolutely necessary for anyone to make a buck in the securities exchange business. I mean you have to keep an eye on the stock market and trends and all these goddamned factors that go into making money in the stock market. It is the research behind the quasi-science of rolling the dice on Wall Street that makes the whole thing work for those who it works for.

If Bush is proposing an inactive private account, I don't think anybody will make any money on it unless they stay on top of it. I have a financial advisor who sends out periodic notices regarding where I should put my 401k money. This is great because for the first time last year I made some money on my 401k. However, if I wasn't actively involved in my investment choices, I would not have been able to keep up with the plastic flow of the stock market.

This is what financial advisors are supposed to do for a living. This is why they charge you money so that you can make (or loose) money in the stock market. Now, whilst my 401k made money, my money market account that was invested in stocks did not make money and I pretty much lost almost what I gained in my 401k. Both portfolio's were ACTIVELY MANAGED ACCOUNTS. Yet the "sure bet" of the uncertain stock market, kept my nest egg, at best, at a net goose egg.

So imagine what would have happened if I had (as the President wants me to) a passively managed private account?