Effective planning requires evaluating options, making strategic decisions, and then acting in a way that lets you achieve your goal. For most people, a retirement plan requires careful consideration of all these elements to ensure a reasonable lifestyle when work is done. But what if your planning was based on ‘just trust me’ advice rather than solid data? Can Wall Street’s fuzzy math be trusted to build your retirement plan?
In researching for this article, I was stunned to read the ‘experts’ who question mainstream Wall Street’s wisdom. Market Watch columnist Jeff Reeves writes:
(C)ountless studies show that Americans are woefully underprepared for retirement and are living longer than ever — so the one-size-fits-all makeup often leaves prospective retirees without enough money to retire on schedule, because of strategies that reduce risk too early for a typical retirement-focused investor.
We’re not supposed to worry about this, however. Just pick a date that’s close to when you turn age 65 and hope for the best.
This from a guy who makes his living reporting on Wall Street investing. He is questioning the very foundation of a strong retirement plan. Reeves laments that in too many cases Wall Street uses the ‘because I said so’ mantra as they replace solid investing advice with hype and conjecture. His article identifies multiple examples of stocks listed as Wall Street darlings that have no performance data to back them up. He cites social media darling Twitter and notes:
The company has never turned a profit under generally accepted accounting practices. In fact, in the first six months of this year (2015), Twitter’s GAAP loss was actually bigger than it was in the first half of 2014.
But thanks to the glory of fuzzy math, Twitter is “profitable” — because someone engineered a magical calculation to make that possible.
It’s hard enough to dig through market data and find a profitable trade right now without worrying about whether numbers are simply make-believe.
When industry insiders start questioning the Wall Street Cartel, isn’t it time to find a better alternative for your retirement plan?