Investing in junk bonds is not an answer for the widows.Best, Why do you imply that ‘widows’ need to be protected from certain types of asset-class risks (and, therefore, excluded from their concomitant asset-class rewards) , but not ‘widowers’? Are you saying that single females whose husbands have died are less capable of supporting themselves than once-married males whose wife has died? Single or married, divorced or never-married, every adult has the responsible to support him or herself. That can include learning how to invest, but needn’t do so, because investing/trading are merely one of the many choices by which a person can make living. Secondly, retiring’ isn’t a right that society needs to provide to anyone. It’s an earned privilege. Them that don’t save enough surplus income in their working years will never be able to stop working. For them that truly are incapable of earning a modest, basic living there are beaucoup social safety nets. I’ve been the beneficiary of them more than once due to economic displacements. So, I’ve lived on that side of the tracks, too. But this is a rich, rich country that overflows with opportunities to find work. It’s work most consider beneath their aspired social class. So they refuse to do it, preferring to wallow in self-pity, envying “the rich” and whining about “social (in)justice”. But blue-collar wages spend just as well at the grocery store and gas pump as money from those oh so clean, oh so prestigious white and pink collar work. I don’t disagree that there is in this country a huge, self-perpetuating class that enriches themselves at the expense of others. But such thieves are irrelevant at the householder level at which most people should be trying to live their lives. Can’t afford a new car every two years? Can’t afford a bigger house than your neighbor? Can’t afford wide screen TVs and the latest cell phones? Can’t afford gym and club memberships? So what? None of that materialism creates health or happiness. And the true irony of giving up that expensive junk is that it now becomes possible to afford it, because one now has the surplus capital needed to invest and the time to learn how to do it properly. Traders have a saying, “Scared money never wins”. And the way that proverb should be interpreted is this. If you lack the resources to take on the risks you should be taking on, then you will end up making what will prove to be even far riskier decisions. I’ve argued this point endless in this forum, and I’ve been endlessly vindicated. If you screw around with principal-protected instruments, because “you can’t afford to take on default-risk”, you have ensured that you have accepted greater tax-risk and inflation-risk than the pitiful returns from those supposedly safe instrument will ever --on average and over the long haul-- be able to overcome. So, in choosing not to lose, you do –in fact -- lose after all in a self-perpetuating, vicious cycle of one bad decision after another. In investing, as in life, what seems ‘safe’ often isn’t, and what might seem ‘risky’ isn’t so when properly managed. That’s the irony few appreciate. For every investment you make, for every trade you make, there can be only one winner and one loser. Either you or your counterparty is wrong about the direction of prices, and the middlemen get their cut no matter what. Thus, investing is a less-than-zero-sum game that 90-95% of those who attempt will fail at. This is roughly the same failure rate as that of a small business, which is what investing really is, and this is why most people should never attempt it. They are too lazy to do the work that effective investing requires (plus scared silly of its risks). As for the Ponzi schemes known as pension plans, most can’t stand on their own merits but depend on incoming contributions --not market earnings-- for their outflows, which is why most are in trouble and why popular sentiment has swung against bailing them out. (In a recent poll, 80% said the government should not step in to bail out Detroit.) For sure, some placebo reforms will be enacted in the same way that some placebo banking reforms were made. But the basic game of winners and losers won’t change. The counterparty to every transaction you make intends to benefit himself. That’s Adam Smith’s “invisible hand” at work, and that’s never going to change no matter one’s wishes for a “kinder, gentler society”. Therefore, each person has to decide whether he or she was born a ‘shark or a ‘minnow’ and then figure out how to survive. http://en.wikipedia.org/wiki/Sharks_and_minnowsDo "great societies" take care of the less fortunate? No, they don't. Those at the top of them --think Athens in its prime-- depend on discardable slave labor. These days, we use a different term for such people. But principal is the same. Them that can, rule. Them that can't grab power (and, therefore, gain easy access to wealth) have two choices. Accept their lot in life or drop out of the power game. That's not a choice America's middle class --the queuing class- is willing to make, because they hope that by conforming to expected norms their turn at the goodies they envy will come in due time. For the boomers, it can't. There are too many of them, all demanding a disproportionate share of a diminishing pie. But a determined blue-collar, scholarship boy --such as I was-- can still grab a decent education and earn a decent living in the trades. Charlie
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