One has to say this for the rounds of life
that keep coming and going; it has worked so far.
the rabbit, after all, has never asked if the grass
wanted to live.
Any more than the owl consults with the rabbit.
Acceptance of the world requires
that I bow even to you,
Master of the night.
“I tore down good last night,” he said. “Pushed my reps on every set in my workout to failure, then added weights and did it again. And again. I really tore down good.” So, with every muscle group exhausted, and fully depleted of glycogen, Joey the bodybuilder rests and eats. That’s when the cellular process occurs that fuses new myofibrils to muscles damaged during weight training to create muscle hypertrophy, a bigger, more crisply defined physique.
Tear down to build up. Joey knows. Shame he doesn’t know his 401k at work needs the same kind of attention. Thirty years ago, Joey and forty-seven million other American workers had dependable defined benefit retirement plans peremptorily replaced with paltry defined contribution plans. The billions not assigned to workers’ retirement plans made corporations look more profitable, grossly and unfairly fattening the compensation packages of CEOs. Now Joey and his cohort have DIY plans which they have zero capacity to manage. Hence the emergence in the 1980s of the financial planning industry.
What does this industry require to satisfy the needs of clients who are ignorant about the financial markets? Nice looking young men and women who earnestly deliver optimism with plausible projections of investment returns. Joey does plenty of squats in the weight room, but he doesn’t know squat about investing. He and millions of fellow 401k investors have to rely on advisors without having the ability to evaluate the advice.
Joey is an ER nurse. Some day he might open a small business, say an ice cream shop. But if he has any smarts, he’ll go to work in another ice cream shop to learn how to operate the business profitably first. His retirement plan, a portfolio with stock in public companies, makes him a business owner. Most of his companies are held within mutual funds. He relies on a financial advisor to select the funds, and he relies on fund managers to manage the funds. He pays a double set of fees for the privilege of being an absentee owner. A minority owner, at that.
Absentee ownership is the death knell for a business. Too much opportunity for the managers to arrange things for their own benefit. Too much likelihood that advisors with no skin in the game will deliver hype. It is when the participants are largely ignorant absentee owners that the market gets overvalued and ripe for collapse.
Such is the case today. When Joey watches the evening news, he sees plenty of evidence of crony capitalism in the corporate world and malfeasance by the banks and brokers that deliver the advice he relies on. The irony of it is that Joey does not connect the news to his 401k.
History is clear about this. When the market becomes populated with shareowners that have no business being business owners, it’s only a matter of time before the owl swoops down, snatches Joey and the other bunnies by the neck, crushes their skulls with his mighty talons, devours them, and shits on the pasture to start the process over again. That’s Nature’s Way.