401k Accounts Have Recovered, or?

By: Stock Trader, Sun Feb 21st, 2010

I read an article today. Article starts like this: "Millions of 401(k) accounts have made up lost ground over the last 10 months". I beg to differ.

No. The millions of 401k did NOT make up any lost ground. Just because few people trade at DOW 10000 does not mean that DOW is worth 10000 for all of these millions. It only means that it was worth that much for the people who has already sold and bought. Until you sell, gains are on paper.

Stock market is a zero sum game. It does not create new value (dividends are negligable). Stock market only distributes wealth between the participants. It is like a casino. You, me, Goldman Sachs put the money, we turn the wheel, and Goldman runs away with your money!

Thus, when all these millions of 401k account owners ask for their dollars, they will have to sell their stocks. Otherwise they don't have anything! Stocks in your account don't pay your mortgage. Debt is in US dollars. Debt is all time high. In order to pay debt, people will sell stocks, bonds, commodities, oil, gold, homes you name it. If they don't, their creditors will. When the sell off starts, stock prices will crash! It is going to be the biggest crash ever!

Stay away from stocks and bonds (keep short term treasuries only) in your 401k. Stocks are a bubble. They can crash and not come back for 20 - 30 years. The bull market event of 1980s and 1990s is a one time wonder. Look at 300 year historic returns:

GMA-URL-0

For the last 40 years till today bonds are ahead of stocks. (Bonds are a bubble too now). Here is why http://www.tradingstocks.net/html/near_bottom.html">we have not seen the stock market bottom in March 2009:

http://www.tradingstocks.net/html/near_bottom.html

This is a deflationary crash. Debt is the problem and we have more of it now. Nothing has been fixed. To sustain GDP growth the government has borrowed unprecedented amount. Nobody prospers by borrowing. The crash will go into history books. This will be the Greatest Depression ever.

http://www.tradingstocks.net/html/prepare_for_market_crash.html

Only gamble with the money you can afford to loose in your 401K. Stock market is a casino. There is no value there. Everybody wants to buy low, sell high. This wish is impossible to realize when everyone plans and hopes the same outcome. Majority of market participants are doomed to be the greater fool who buys at the high price. When the money supply deflates, current prices cannot be sustained. Money supply is deflating and will deflate more. The bubble is the money supply:

http://www.tradingstocks.net/html/inflation_deflation_credit_bub.html

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401k Accounts Have Recovered, or?