Derivatives belong to what should be called -- but never is -- the unreal economy, a place where speculators make bets about what will happen in the real economy

In an era with derivatives proliferating (and still unregulated) not to mention CMOs (collateralized mortgage obligations or "Toxic waste") and a market mostly leveraged on debt - no individual citizen - unless loaded with disposable income they can afford to lose, has any business playing the "Maul street" casino.

Let's also not forget these little items:

i) the markets are now 95% driven by "momentum investors" - huge monolithic, institutionalized consortiums like corporate-owned pension funds etc. They use computerized trading with "triggers" that can precipitate meltdowns in nanoseconds.

ii) As per a Financial Times report from three years ago, despite revised prospectuses (ostensibly with greater information) - the specific details of "red ink" on any company's blotter are still not disclosed. This means individual investors are still gambling with their hard-earned money - since they don't have ALL the info they need to make investment decisions. Let's also not forget the Bloomberg report (from Jan. 1997) on how large institutional investors were always given "heads ups" at least a day in advance of the small fry.

What this means is the small fry are expendable. In any bubble scenario their gains will be sacrificed first - even as they are plied with the degenerate, self -serving advice to "buy and hold", "stay the course", and "don't panic".

Hey - I "panicked" and pulled out of the Janus Worldwide fund in 1997. Glad I did, as the fund lost more than 33% in share value after that, which I wouldn't have recovered from years of working. Was I diversified? Yes, but only later did I find the bond "funds" I held, were laden with "toxic waste". So I pulled out of them too.

The honchos on the Street may call me "pedestrian" - but I am now in fixed income instruments exclusively. No, I will not be a millionaire by the time I retire. But, I will not have to work until I am 85 either - just to have more $$$ to feed to the scheisters and sharks on the "Street".

For me now, the clock is ticking...as my son is here. Any advice/help?

Leave him intact, partial circumcision is often worse than the whole. Tell your hubbie it's your choice too. Ignore the fact your other sons had it done. This is a new son, where you have the chance to do the right thing.

aynatt wrote:

Historically, the stock market (which has been in place for well over a century now) has paid investors an average of about 10% a year. That is, if you put your money there and LEAVE it there

That's one of the biggest canards going. There is, in truth, no such thing as this 'average investor' earning 10% a year such that this can be applied to any given REAL investor. The reason is because all the hundreds of dips and corrections are averaged out, and one may have to pull out (e.g. to retire) when a dip makes a huge impact.

In terms of REAL individual investors, hardly any will earn this mythical 10%, and certainly not after taxes, expenses etc. T. Rowe Price did a study in 2003 for an investor cashing into his IRAs starting in 1995 and another in 2001. The latter over his life was found to have nearly $180k less than the former. The difference? When each decided to retire. (And bear in mind this decision may be out of one's hands, as when a company lets a worker go or ealry retires her for age-related reasons)

The moral of the story is to look at the 10% as kind of an aggregate statistical average. In reality, when the inevitable dips and corrections are factored in, this becomes 6% and maybe even less. Check out the WSJ article from Nov. 2003, 'A Harsh Fact - Most of Your Investments Won't Earn Much over A Lifetime'