Ok, I will show some compassion for those that were duped, if they bought AAA securities. That said when I got my first job that had a 401k available, it clearly said securities were riskiest in the pamphlet, bonds next, and money market last. That was about 15 years ago. It even tells you based on age bracket the percentage to invest in each. Sure these ppl. were duped and some outright conned, but it's easy to con a greedy person.
I'd guess that most if not all of these 401K investments were in Mutual Funds with big financial institutions Like Fidelity, Vanguard etc. The mutual fund industry has scammed the american public and avg joe and jane investor. They tell them to stay invested, stay the course, think long term, the market outperforms blah blah blah and all the rest of the bs they spew to americans. They don't want you to ever redeem shares. They want to keep your money so they can charge for fees. This whole investing BS has been peddled to the american public for decades now. I don't place much fault with the average joe that has put their money in 401K's, mutual funds. They are not savvy skilled investors. Few are. Some think they are but aren't, just read this website. The avg joe is at best capable of picking a mutual fund. That is what mutual funds are supposed to be for. For unskilled investors that aren't capable of selecting individual stocks. So unskilled investors pay FEES for professional investment managers to manage their money via mutual funds. I think the avg joe jane has finally gotten a wake up call as to what all is going on in the financial universe and the dangers from an ever risky equities market and an investment community that doesn't really give a damn about their investors.
In the late 60's my parents had a small retirement nest egg invested in mutual funds. When the market tanked it took 12 years for their investment to return to par. When I learned about TVM, I realized they still got hosed. That was my first lesson about Wall St. It kept me from buying in to the myth. Personal responsibility has never been part of the not so soft sell involved in the marketing of these assets. No one here should write off the human impacts that many are experiencing as lack of personal responsibility. Traders know there's nothing noble in holding a loser. Maybe kiddies just starting out can take a lesson here. For sure, demographics, geopolitics, and de-globalization are working against them.
Say what you will about the guy who wrote Rich Dad Poor Dad, but he told me to get out of mutual funds and go into commodities. I did that and I was rewarded. Then I started learning more about the markets and realized mutual funds were the worst game in town. I figured, worst case, I could just buy an ETF and hold -- and I would've done this, had it not been for the fact that I got addicted to the market in general and started studying how to control losses. However, I tried to warn HUNDREDS of friends. No one listened to me because they were listening to their "financial advisers" ... My girlfriend's mother lost 50%. I told her to bail, but she went to some idiot adviser who told her everything would be ok. At least my parents listened to me. They're up 40% on this chaos, know how to cut losses, and check their $hit every day. I call them daily.
Anyone with a properly allocated pension fund has not lost much during the last 2 years. For most risk-averse people, proper allocation is to have your age plus 10-20% in government bonds. Government bonds have gone up significantly in the last 2 years, offsetting a lot of the losses in stocks. A typical 45 year old investor with 60% bonds 40% stocks has done just fine. The people who have been killed are those who were 75-100% long stocks. But if you insist on taking massive risk by having a huge stock allocation, then of course you are going to get creamed when a major bear market comes along. That's the flip side of making a killing when there's a big bull market. As a buy & holder you can't get big returns during good times without also taking the risks during the bad times. As for the fund industry, there are very low cost stock index and government bond funds, and besides you can own bonds directly from the government. Fee-based (rather than commission-based) financial planners are plentiful, and there are numerous books costing $10-30 that tell you how to construct an appropriate investment portfolio for retirement, not to mention *free* resources online. If in the face of this wealth of information, the public continues to allocate to people who charge them 0.5-2% of assets per annum when there are much cheaper alternatives providing identical service, then that is their own damn stupid fault.
No one is ever forced to enter a casino. And unlike gambling, there is no such thing as 401 k addiction.
If people were up 200% on their 401ks full of stocks nobody would be crying. But these dumbasses loaded up their retirement accounts with one of the most risky and volatile asset classes in history and now have to pay the price because they're down 50%. These people don't deserve any compassion as they mistook personal greed for a long-term investment strategy.
But what about the couple in the story? The husband has to work at Starbucks and they won't be able to buy a nice log cabin! The horror...