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View Full Version : If Economic Professors are supposed to be experts, why are their 401(k)'s down big??




socialize_me
12-13-2008, 06:19 PM
Just curious. My Economics professor told me his 401(K) is down about $70,000, and he said there's some people in the Business College that have lost millions.

I just find it funny how I see articles on Digg where Obama gets support of X amount of college professors as if that means a damn thing, why they teach Economics if they lose their pants because they cannot see good/bad policies of the Federal Reserve, etc. etc.??

Shouldn't the people whose 401(k)'s are doing exceptionally well be teaching Economics? Some of my professors who don't teach Business are actually UP this year on their 401(k)'s. Kind of disheartening that I'm learning Business from a group of "experts", yet the ones teaching History have a better idea what to do with their retirement plans.

Imperial
12-13-2008, 06:43 PM
I understand your plight. I am debating a guy running for Congress, and trying to make him understand that just because the world's "foremost" and "majority" of economics don't like the gold standard doesn't mean they are necessarily right. Interesting that it is the history teachers who get it right though...

Arklatex
12-13-2008, 07:06 PM
Interesting that it is the history teachers who get it right though...

No, my sister is about to marry one and he is a confessed socialist. FDRs deal was the greatest thing ever he says.

AJ Antimony
12-13-2008, 09:51 PM
It's actually really embarrassing that I share a planet with about 6 billion morons.

M House
12-13-2008, 10:02 PM
Careful you're probably using economic math there, we should atleast have a significant number based on supposed principle alone.

LibertyIn08
12-13-2008, 10:37 PM
Having a firm grasp of Economics still does not insure that an individual will be a good investor.

tremendoustie
12-13-2008, 10:44 PM
It's actually really embarrassing that I share a planet with about 6 billion morons.

I really think it has less to do with intelligence, and more to do with an inability to think fearlessly, as well as laziness.

Most people are too lazy to do serious thinking, and most of the rest are simply unwilling to risk upsetting their pre-concieved notions, biases, and deeply held beliefs. It takes a lot of courage to logically conclude that you have been wrong, and to change your beliefs based on the conclusion. It makes it harder when you've held that belief for most of your life.

We must always be willing to do that, even after we think we've found the truth.

Flirple
12-13-2008, 11:48 PM
Having a firm grasp of Economics still does not insure that an individual will be a good investor.

Very true. And be careful about rubbing it in just yet. Because of the across-the-board sell off of the last 3 months you would be hard pressed to find anyone who's account isn't way down. Just ask Peter Schiff's clients. Time will tell who invested correctly for this crises but right now even the free marketers have taken a hit. The easy part is predicting that a crises would happen. The hard part is knowing exactly HOW and WHEN it would do so so that you could invest appropriately.

socialize_me
12-14-2008, 12:09 AM
Very true. And be careful about rubbing it in just yet. Because of the across-the-board sell off of the last 3 months you would be hard pressed to find anyone who's account isn't way down. Just ask Peter Schiff's clients. Time will tell who invested correctly for this crises but right now even the free marketers have taken a hit. The easy part is predicting that a crises would happen. The hard part is knowing exactly HOW and WHEN it would do so so that you could invest appropriately.

If you have a good understanding of economics, you should be able to predict the market fairly easily. Peter Schiff knew there would be a massive bust after the Housing Boom just by looking at the Federal Reserve's monetary policy--that's something Economists follow religiously.

Deflation always follows inflation, so it's natural to see stock prices drop as they have. How could you have profited from this?? Shorted the market. In fact, you make more money in Bear Markets than you do in Bull Markets with far less time. A stock has a hard time doubling in price, but can easily fall 50% in a week's time.

There's a big difference between Peter Schiff and my professors, though. Peter Schiff is investing long term meaning the investments he has chosen are likely to fluctuate in the short term. My professors were invested in financials heavily. There's a hell of a difference between Peter Schiff's customers who invest in foreign, high dividend paying stocks and bonds versus speculative domestic aggressive funds like my professors did. At least Peter Schiff's customers are getting 15-20% dividend checks.

Flirple
12-14-2008, 12:36 AM
If you have a good understanding of economics, you should be able to predict the market fairly easily. Peter Schiff knew there would be a massive bust after the Housing Boom just by looking at the Federal Reserve's monetary policy--that's something Economists follow religiously.

Deflation always follows inflation, so it's natural to see stock prices drop as they have. How could you have profited from this?? Shorted the market. In fact, you make more money in Bear Markets than you do in Bull Markets with far less time. A stock has a hard time doubling in price, but can easily fall 50% in a week's time.

There's a big difference between Peter Schiff and my professors, though. Peter Schiff is investing long term meaning the investments he has chosen are likely to fluctuate in the short term. My professors were invested in financials heavily. There's a hell of a difference between Peter Schiff's customers who invest in foreign, high dividend paying stocks and bonds versus speculative domestic aggressive funds like my professors did. At least Peter Schiff's customers are getting 15-20% dividend checks.

Had Peter had known exactly how this would unfold he would have probably recommended people stay in cash until now and then buy up all the foreign stocks and currencies that he recommends. And his strategy is counting on the rest of the world decoupling from the US and then capital flowing to them and away from our economy all the while we suffer through hyperinflation. This very well might prove to be true. And I don't think it is a ridiculous theory. But there are other ways for this all to play out as well that might end up costing Schiff's clients more than the rest of the population. So far the rest of the world is following our lead and doing everything wrong just like our government.

I agree totally though that there is a world a difference between Peter and your professor of course. Peter predicted in detail in advance why we would see a crisis (that's the easy part that even your professor failed to comprehend.)

All I am saying is that Peter's advice might prove to be dead wrong (or dead right) for his investors and end up costing them as much as liberal professors. Only time will tell. Understanding economics doesn't guarantee investment success because you can't predict exactly what government interventions will be. If so, then libertarian investors would on average have more investment success than the average Keynesian investor. They do not.

WRellim
12-14-2008, 03:54 AM
Just curious. My Economics professor told me his 401(K) is down about $70,000, and he said there's some people in the Business College that have lost millions.

I just find it funny how I see articles on Digg where Obama gets support of X amount of college professors as if that means a damn thing, why they teach Economics if they lose their pants because they cannot see good/bad policies of the Federal Reserve, etc. etc.??

Shouldn't the people whose 401(k)'s are doing exceptionally well be teaching Economics? Some of my professors who don't teach Business are actually UP this year on their 401(k)'s. Kind of disheartening that I'm learning Business from a group of "experts", yet the ones teaching History have a better idea what to do with their retirement plans.


I wonder what the response would be if you dropped the classes with those (so called) Economics experts... and gave them a note that said something like:
Sorry, but you failed your test and got an "F" on your final exam (your 401K). This proves that you obviously lack a fundamental understanding of the basic subject matter at hand. I would suggest you embark on remedial coursework before resuming teaching (see attached). And BTW, I will be pursuing further education with teachers that are more knowledgeable. Good day.
Then include a copy of Garet Garrett's "A Bubble That Broke The World" (PDF) (http://www.mises.org/books/bubbleworld.pdf) which is a pretty thorough explanation of what they should already know (but don't) -- and is as applicable to the current "crisis" as it was to the one in 1929.

jkm1864
12-14-2008, 11:32 AM
They are not doing everything wrong. From their perspective the masters are doing everything right. They will inflate the dollar till it explodes to get out of debt. When they are out of debt they will cancel all dollar obligations and institute a new currency. You see its kind of smart in a back stabbing evil crook sort of way. Hey the good thing is if this happens our debt will vanish too if we can keep our jobs for that long.

mediahasyou
12-14-2008, 11:41 AM
because keynesian is a sham.

gaazn
12-14-2008, 11:52 AM
First, investing is long-term. Secondly, 401k choices are either money market, bonds, or long mutual funds. I am sure if the 401k choices had some that are short or ultrashort mutual funds, then some of the professors might have portfolios that are up big.

torchbearer
12-14-2008, 12:02 PM
No one can understand the complexities of the day to day movements of the market, at best, they can understand the principles of the market.
In a controlled economy like ours... the market will be eratic, as well as unpredictable.
In a free market, the market will give good indicators and will be more predictable, but not fully predictable.