Are 401K's safe?

If the dollar is no longer used and your stocks are priced in dollars they will be worth nothing. But I don't see that happening.
 
People who held solid German stocks through the Weimar hyperinflation came out all right. When you buy a share of equity in the company it remains a share regardless of what you purchased it with. One share of company A is one share of Company A no matter what happens to the currency. In fact, corporate equity is often not even purchased in dollars, being instead offered as part of a compensation package or as part of a purchase price of a business. But I would want to hold the certificates if I were to stay in equities.

That having been said, if I had money in equities I would be on the phone right now trying to liquidate them. Penalty be damned. The stock market is a bubble.

The value of the dollar has had a reprieve due to the collapse of the Euro. But the honeymoon will end. I would turn stocks into dollars and start hunting for agricultural land to buy with the dollars while they retain value.
 
I don't see how this possibly could happen. If they actually tried to move legislation like this, there would be a period of time after it leaves committee that people could act on the information (empty their 401ks) before it's voted on, which would end in the worst stock market crash the world has ever seen. I think most politicians want to avoid being responsible for that.

Edit: Oops I was responding specifically to the confiscation chatter
 
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brandon said:
I don't see how this possibly could happen. If they actually tried to move legislation like this, there would be a period of time after it leaves committee that people could act on the information (empty their 401ks) before it's voted on, which would end in the worst stock market crash the world has ever seen. I think most politicians want to avoid being responsible for that.

Edit: Oops I was responding specifically to the confiscation chatter
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Maybe. But people are spooked by the withdrawal penalties. People will only take that loss if they are convinced that they will suffer WORSE losses if they don't and that takes a level of foresight that is not in abundant supply.

Besides, it isn't individuals that are holding up the stock market. It is the Fed working through banks. Look at the trade volumes. The thing is almost dead in the water.
 
Acala said:
People who held solid German stocks through the Weimar hyperinflation came out all right. When you buy a share of equity in the company it remains a share regardless of what you purchased it with. One share of company A is one share of Company A no matter what happens to the currency.
Click to expand...

That's what I was guessing. It's good to hear someone else say it.


Acala said:
That having been said, if I had money in equities I would be on the phone right now trying to liquidate them. Penalty be damned. The stock market is a bubble.

The value of the dollar has had a reprieve due to the collapse of the Euro. But the honeymoon will end. I would turn stocks into dollars and start hunting for agricultural land to buy with the dollars while they retain value.
Click to expand...

Isn't it really the dollar not the the stock market that's the bubble now? My feeling is that stocks will go up as the dollar loses value. Just not as fast as other prices so you will lose purchasing power. But if you're holding cash or bonds or treasuries, you'll get crushed. Personally I'm invested in foreign stocks and physical gold.
 
Zippyjuan said:
One person testifying at a Senate hearing proposed the idea which was immediately shot down (though some like to suggest that it is bigger than that and maybe a done deal- it is not). IRAs and 401ks are not going to be seized. Will their value move up and down and be risky for that reason? Yes- all investments will do that.

If the dollar is worthless then all things denominated in dollars -all bank acounts, and investments like IRAs and 401ks- will also be worthless so there will be nothing to "seize" anyways.
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I don't think it's a done deal literally, but I think that the fact they invited the author of the plan to testify indicates that they at least consider the plan viable. For all we know, they already have the plan drafted up and are waiting for a crisis to shove it through. Sort of like the Iraq war plans.
 
Acala said:
Maybe. But people are spooked by the withdrawal penalties. People will only take that loss if they are convinced that they will suffer WORSE losses if they don't and that takes a level of foresight that is not in abundant supply.

Besides, it isn't individuals that are holding up the stock market. It is the Fed working through banks. Look at the trade volumes. The thing is almost dead in the water.
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Trade volume isn't that low. It is down slightly this year but not much below where it has been for the last ten years- see bar graph below chart at this link: http://finance.yahoo.com/echarts?s=%5Edji+interactive#symbol=^dji;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (image is flash so I can't copy it for you).
 
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The Free Hornet said:
I thought the penalty ends up being like 20% or more. Additionally, cashing out means losing future employer contributions (and I thought I would have to quit my job too - not gonna happen). Maybe Acala is correct, they might incrementally push people towards "safe" investments that favor TPTB. But raising taxes would be the easiest way to get 401 money.

More so, the 401 is tax deferred so cashing out now will increase the war chest. Maybe in 40 years we will have come to our senses or the fake money is all gone as pcosmar suggests.

For now, I'm happy with my hands, and Uncle Sam's, off that account.
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Cashing out means the withdrawal is taxed as income. The broker will withold 20%, but most of us pay less than 20% on our income. There's also an early withdrawal penalty of 10%.

You can make penalty free withdrawals for certain things. Buying a house, paying for school, medical expenses.
 
Madison320 said:
That's what I was guessing. It's good to hear someone else say it.




Isn't it really the dollar not the the stock market that's the bubble now? My feeling is that stocks will go up as the dollar loses value. Just not as fast as other prices so you will lose purchasing power. But if you're holding cash or bonds or treasuries, you'll get crushed. Personally I'm invested in foreign stocks and physical gold.
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The value of bonds (including Treasuries) moves inversely with interest rates so if interest rates rise (and if inflation increases, so will interest rates since expected inflation is one component of interest rates) then yes, the value of bonds will go down.
 
Madison320 said:
That's what I was guessing. It's good to hear someone else say it.




Isn't it really the dollar not the the stock market that's the bubble now? My feeling is that stocks will go up as the dollar loses value. Just not as fast as other prices so you will lose purchasing power. But if you're holding cash or bonds or treasuries, you'll get crushed. Personally I'm invested in foreign stocks and physical gold.
Click to expand...

The Fed itself reports that virtually the entire increase of the S & P since the crash has been fueled by QE. That strikes me as being a bubble in stick prices.
 
Zippyjuan said:
Trade volume isn't that low. It is down slightly this year but not much below where it has been for the last ten years- see bar graph below chart at this link: http://finance.yahoo.com/echarts?s=%5Edji+interactive#symbol=^dji;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (image is flash so I can't copy it for you).
Click to expand...

I was thinking more about volume in the last week or two. I would check it out and see if I am right but I have to catch a plane.
 
Have a good trip!

Maybe August is a slow month- most people take vacations then. I don't keep track of things like volume so I am only going by the charts.

Found a better chart (shows one year- you can select longer terms at the link) :
big.chart


http://www.marketwatch.com/investing/index/djia/charts
 
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401k's would never be seized. Just like HMO's were not nationalised by Obamacare. The rules will simply be changed a little bit so that you *want* to give up your 401k.

Most likely wither by providing a way to be made whole right after a crash by shifting everything into Treasuries, or Social security, or placing a penalty for not doing so.
 
Zippyjuan said:
If the dollar is no longer used and your stocks are priced in dollars they will be worth nothing. But I don't see that happening.
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Wouldn't the price be closer to infinity than zero? Regardless, aren't shares expressed as some fractional worth of a corporation? Only the exchange is tied to the dollar, so couldn't these be traded with a different currency at the same or a different exchange?

Maybe this is a nitpick, but how does being priced in dollars matter to a multi-national?
 
Of course if they were worth "infinity" then one share could theoretically be exchanged for every single thing on the planet- including all other "infinity" shares.

The shares are issued on one of the global stock exchanges and are traded on that exchange only- you can't take shares you bought on the German exchange and resell them on the UK stock exchange. So what do big international companies do? They issue shares on multiple exchanges. They may for example sell shares worth an initial value of $100 billion in New York and another $100 billion in Tokyo or Hong Kong. The share price is based on the total number of shares in the country issued. And they have different subsidiaries in different countries. The currency may not matter as much to the companies but it does matter to the exchanges- they don't want shares sold on another exchange dumped on their exchange- driving down prices (the value of shares) there. (winging this off the top of my head at the moment). Revenues are broken down by country too (which will effect the stock price by stock exchange country as well- good sales in the UK may cause their shares there to rise while poor results in the US may cause the stock to fall there)- for tax purposes. They have to pay their corporate taxes for each country so they basically have different businesses in different countries each with their own stock shares issued- even if they share the same name and the bulk of the profits goes to the main headquarters.
 
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