How much is the 401K and retirement savings propping up the market?

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m@ver1ck
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How much is the 401K and retirement savings propping up the market?

Post by m@ver1ck » Thu May 16, 2019 8:43 am

I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?

Dottie57
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Re: How much is the 401K and retirement savings propping up the market?

Post by Dottie57 » Thu May 16, 2019 8:46 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
You do realize people are paid throughout the month and not the 1st and 15th. Monthly, weekly, bi-weekly, and not always on a Friday . Some are paid on Wednesday’s or Thursday’s.

RadAudit
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Re: How much is the 401K and retirement savings propping up the market?

Post by RadAudit » Thu May 16, 2019 8:49 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline
Time has a way of answering these questions. Best of luck.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

knowledge
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Re: How much is the 401K and retirement savings propping up the market?

Post by knowledge » Thu May 16, 2019 9:00 am

To the extent that there's a discernible pattern on 401k contributions into the market, you can bet that others have thought about it before, and have taken advantage of it. Likely that's gone through multiple cycles in its history and hopefully is now just drowned out as noise.

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CABob
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Re: How much is the 401K and retirement savings propping up the market?

Post by CABob » Thu May 16, 2019 10:46 am

Dottie57 wrote:
Thu May 16, 2019 8:46 am
You do realize people are paid throughout the month and not the 1st and 15th. Monthly, weekly, bi-weekly, and not always on a Friday . Some are paid on Wednesday’s or Thursday’s.
And just because a company issues paychecks on the 15th does not necessarily mean that the 401k money is invested on that date.
Bob

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jeffyscott
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Re: How much is the 401K and retirement savings propping up the market?

Post by jeffyscott » Thu May 16, 2019 10:57 am

It seems that the 401k money has been going to bond funds, so it would not seem to be propping up the stock market...maybe the bond market :?: :wink: .

U.S. equity funds--active and passive--collected just $86 billion in net new money during a 10-year bull market.
https://www.morningstar.com/articles/92 ... y-fun.html

Article goes on to say $2 trillion added to taxable bond funds over the same period.
Time is your friend; impulse is your enemy. - John C. Bogle

Dottie57
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Re: How much is the 401K and retirement savings propping up the market?

Post by Dottie57 » Thu May 16, 2019 11:51 am

CABob wrote:
Thu May 16, 2019 10:46 am
Dottie57 wrote:
Thu May 16, 2019 8:46 am
You do realize people are paid throughout the month and not the 1st and 15th. Monthly, weekly, bi-weekly, and not always on a Friday . Some are paid on Wednesday’s or Thursday’s.
And just because a company issues paychecks on the 15th does not necessarily mean that the 401k money is invested on that date.
Good point. I now remember my contributions didn’t hit the next business day.

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jhfenton
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Re: How much is the 401K and retirement savings propping up the market?

Post by jhfenton » Thu May 16, 2019 12:23 pm

As others have said, there's no simple pattern of money flowing into the market on certain days.

Right now, my wife and I do both get paid on the same every other Friday (tomorrow).

But my 401(k) contributions are invested the day before pay day (P-1) (i.e. today/Thursday), while my wife's contributions are invested anywhere from P+0 to P+2 (i.e. Friday through Tuesday) (and occasionally P+3).

In a prior job, my wife was paid monthly, and 401(k) money could show up anytime over the following week.

In a prior job, I was paid on the 15th and last day of the month, as you seem to think is the norm.

My employer pays many hourly folks weekly.

Etc.

mega317
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Re: How much is the 401K and retirement savings propping up the market?

Post by mega317 » Thu May 16, 2019 12:28 pm

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
Sure, if the population goes down, I do think the stock market would not fare well. And sure if all of our kids stop investing, and all of the banks and VC firms etc they run stop investing, that would be bad.

Bacchus01
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Re: How much is the 401K and retirement savings propping up the market?

Post by Bacchus01 » Thu May 16, 2019 12:37 pm

jhfenton wrote:
Thu May 16, 2019 12:23 pm
As others have said, there's no simple pattern of money flowing into the market on certain days.

Right now, my wife and I do both get paid on the same every other Friday (tomorrow).

But my 401(k) contributions are invested the day before pay day (P-1) (i.e. today/Thursday), while my wife's contributions are invested anywhere from P+0 to P+2 (i.e. Friday through Tuesday) (and occasionally P+3).

In a prior job, my wife was paid monthly, and 401(k) money could show up anytime over the following week.

In a prior job, I was paid on the 15th and last day of the month, as you seem to think is the norm.

My employer pays many hourly folks weekly.

Etc.
Yep. Our "payday" is every other Friday, but the money actually gets deposited on Thursday and our 401K contributions usually hit P+6, or the following Wednesday.

venkman
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Re: How much is the 401K and retirement savings propping up the market?

Post by venkman » Thu May 16, 2019 10:40 pm

If anything is propping up the stock market, it's

1. People chasing return in an era of low bond yields.
2. The richest 10% of the population, who collectively own 80%+ of the stock market and likely will never have a need to sell.

SovereignInvestor
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Re: How much is the 401K and retirement savings propping up the market?

Post by SovereignInvestor » Thu May 16, 2019 11:40 pm

Or what's propping up the market cold be the EPS for the S&P rising 11% in 2017, 23% for 2018, and even after estimate cuts still projected at about 4% growth for 2019.

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CyclingDuo
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Re: How much is the 401K and retirement savings propping up the market?

Post by CyclingDuo » Fri May 17, 2019 11:39 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I invest on the 9th and 23rd of every month because I certainly don't want to be a part of any Ponzi scheme. :beer

I hope you do realize that the millennial population is taking over as larger than the baby boomer population this year...

https://www.washingtonpost.com/national ... 96868a7715

And Gen X'ers will surpass boomers in 2028...

Image
https://www.pewresearch.org/fact-tank/2 ... y-boomers/

Here's to all those children of Millennials and Gen X'ers investing on the 1st and 15th of every month as the decades roll on....

:sharebeer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

H-Town
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Re: How much is the 401K and retirement savings propping up the market?

Post by H-Town » Fri May 17, 2019 11:51 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I'd be surprised if you don't think it's some sort of a Ponzi scheme. Except that stock market is backed by the financial system and economies of every countries in the world, not just Ponzi himself.

Just think about it, you put money in during your working years and hope that someone else will buy your paper asset when you cash out slowly in your retirement. How's that not a Ponzi scheme?

Godot
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Re: How much is the 401K and retirement savings propping up the market?

Post by Godot » Fri May 17, 2019 1:28 pm

CyclingDuo wrote:
Fri May 17, 2019 11:39 am
m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I invest on the 9th and 23rd of every month because I certainly don't want to be a part of any Ponzi scheme. :beer

I hope you do realize that the millennial population is taking over as larger than the baby boomer population this year...

https://www.washingtonpost.com/national ... 96868a7715

And Gen X'ers will surpass boomers in 2028...

Image
https://www.pewresearch.org/fact-tank/2 ... y-boomers/

Here's to all those children of Millennials and Gen X'ers investing on the 1st and 15th of every month as the decades roll on....

:sharebeer
Millennial population is a larger percentage of the population compared to boomers, but US birth rate now at a 30-year low. Assuming this continues, and I do assume this will continue, this will put more pressure on various immigration schemes to continue funding of safety net programs. We'e seen how other low birthrate countries like Germany and Japan have addressed this phenomenon.
“There is man in his entirety, blaming his shoe when his foot is guilty.” ― Samuel Beckett, Waiting for Godot

pdavi21
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Re: How much is the 401K and retirement savings propping up the market?

Post by pdavi21 » Fri May 17, 2019 4:42 pm

A ton. I use margin to trade leveraged inverse ETFs and take advantage of this free money.
:moneybag :moneybag 8-) :moneybag :moneybag

Sorry, I'm in a sarcastic mood today.
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Re: How much is the 401K and retirement savings propping up the market?

Post by MotoTrojan » Fri May 17, 2019 9:11 pm

H-Town wrote:
Fri May 17, 2019 11:51 am


Just think about it, you put money in during your working years and hope that someone else will buy your paper asset when you cash out slowly in your retirement. How's that not a Ponzi scheme?
Because there was tangible economic output from the capital used to generate those paper assets.

Someone recently made a very interesting point about how the economy can continue to grow without simply printing more money.

Imagine a world where there is only $100K and only one person has it. That person pays another person $100K to build a home which is thus valued at $100K. At the end of the day the builder has $100K cash, and the home-owner has a net-worth of $100K from the home. Now the builder can pay someone else $100K to build them a yacht. This is what our economy is doing everyday. Doesn't feel like a ponzi scheme to me.

Without economic growth it certainly would be.

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arcticpineapplecorp.
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Re: How much is the 401K and retirement savings propping up the market?

Post by arcticpineapplecorp. » Fri May 17, 2019 10:01 pm

if you believe the market is being propped up and nothing more than a ponzi scheme, than shouldn't you short the market to benefit greatly from its inevitable decline? Why aren't you doing that?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Doc7
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Re: How much is the 401K and retirement savings propping up the market?

Post by Doc7 » Fri May 17, 2019 10:25 pm

CyclingDuo wrote:
Fri May 17, 2019 11:39 am
m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I invest on the 9th and 23rd of every month because I certainly don't want to be a part of any Ponzi scheme. :beer

I hope you do realize that the millennial population is taking over as larger than the baby boomer population this year...

https://www.washingtonpost.com/national ... 96868a7715

And Gen X'ers will surpass boomers in 2028...

Image
https://www.pewresearch.org/fact-tank/2 ... y-boomers/

Here's to all those children of Millennials and Gen X'ers investing on the 1st and 15th of every month as the decades roll on....

:sharebeer

By what sorcery are the Millenials going to add 3 million people in the next 17 years?

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CyclingDuo
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Re: How much is the 401K and retirement savings propping up the market?

Post by CyclingDuo » Fri May 17, 2019 10:47 pm

Doc7 wrote:
Fri May 17, 2019 10:25 pm
CyclingDuo wrote:
Fri May 17, 2019 11:39 am
m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I invest on the 9th and 23rd of every month because I certainly don't want to be a part of any Ponzi scheme. :beer

I hope you do realize that the millennial population is taking over as larger than the baby boomer population this year...

https://www.washingtonpost.com/national ... 96868a7715

And Gen X'ers will surpass boomers in 2028...

Image
https://www.pewresearch.org/fact-tank/2 ... y-boomers/

Here's to all those children of Millennials and Gen X'ers investing on the 1st and 15th of every month as the decades roll on....

:sharebeer

By what sorcery are the Millenials going to add 3 million people in the next 17 years?
Simple. The death of Boomers.

+

Addition to the Millennial population via immigration.

https://www.pewresearch.org/fact-tank/2 ... d-in-2019/
Last edited by CyclingDuo on Sat May 18, 2019 5:28 am, edited 1 time in total.
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CyclingDuo
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Re: How much is the 401K and retirement savings propping up the market?

Post by CyclingDuo » Fri May 17, 2019 10:49 pm

Godot wrote:
Fri May 17, 2019 1:28 pm
Millennial population is a larger percentage of the population compared to boomers, but US birth rate now at a 30-year low. Assuming this continues, and I do assume this will continue, this will put more pressure on various immigration schemes to continue funding of safety net programs. We'e seen how other low birthrate countries like Germany and Japan have addressed this phenomenon.
Instincts will eventually take over and a whole new breed of helicopter parents will pilot the echo-echo boomers.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: How much is the 401K and retirement savings propping up the market?

Post by Glockenspiel » Fri May 17, 2019 10:55 pm

CyclingDuo wrote:
Fri May 17, 2019 10:47 pm
Doc7 wrote:
Fri May 17, 2019 10:25 pm
CyclingDuo wrote:
Fri May 17, 2019 11:39 am
m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.

Essentially / has the stock market become some sort of a Ponzi scheme ?

If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
I invest on the 9th and 23rd of every month because I certainly don't want to be a part of any Ponzi scheme. :beer

I hope you do realize that the millennial population is taking over as larger than the baby boomer population this year...

https://www.washingtonpost.com/national ... 96868a7715

And Gen X'ers will surpass boomers in 2028...

Image
https://www.pewresearch.org/fact-tank/2 ... y-boomers/

Here's to all those children of Millennials and Gen X'ers investing on the 1st and 15th of every month as the decades roll on....

:sharebeer

By what sorcery are the Millenials going to add 3 million people in the next 17 years?
Simple. The death of Boomers.
I think they’re projecting that 3 million Millenial-aged immigrants will be added from other countries.

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CyclingDuo
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Re: How much is the 401K and retirement savings propping up the market?

Post by CyclingDuo » Sat May 18, 2019 5:34 am

Glockenspiel wrote:
Fri May 17, 2019 10:55 pm
I think they’re projecting that 3 million Millenial-aged immigrants will be added from other countries.
Yes. Both authorized and unauthorized immigrants.

There were 10.7 million unauthorized immigrants living in the U.S. in 2016, the lowest total since 2004, according to the most recent Pew Research Center estimates.

The 44 million foreign-born people living in the U.S. in 2017 accounted for 13.6% of the population, according to a Pew Research Center analysis of the American Community Survey. That is the highest share since 1910, when immigrants were 14.7% of the total population.

https://www.pewresearch.org/fact-tank/2 ... d-in-2019/
"Everywhere is within walking distance if you have the time." ~ Steven Wright

JoeRetire
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Re: How much is the 401K and retirement savings propping up the market?

Post by JoeRetire » Sat May 18, 2019 6:17 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.
That appears to be a feeling not based on any actual facts.

Which market "kinda rebounds" on every 1st and 15th? By how much? How do you know this other than "feeling"?
Essentially / has the stock market become some sort of a Ponzi scheme ?
No.
If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
Do you expect your kids to suddenly stop investing? If so, why?

Are you expecting some sort of apocalypse that causes the population to suddenly plummet? If so, I suspect there will be bigger problems than a slowly declining market.

harvestbook
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Re: How much is the 401K and retirement savings propping up the market?

Post by harvestbook » Sat May 18, 2019 6:51 am

I'm self-employed so I invest every time I get a few spare dollars. And also people are constantly cashing out of their 401ks, too. It's always in flux. I don't see much changing in the course of the next few generations.
I'm not smart enough to know, and I can't afford to guess.

palaheel
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Re: How much is the 401K and retirement savings propping up the market?

Post by palaheel » Sat May 18, 2019 7:44 am

Countering, somewhat, any "propping up" effect is that MegaCorps' defined benefit plans are no longer buying anything. They don't exist anymore.
Markets crash. Markets recover. Inflation takes your money FOREVER.

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Re: How much is the 401K and retirement savings propping up the market?

Post by Reb Tevye » Sat May 18, 2019 9:11 am

m@ver1ck wrote:
Thu May 16, 2019 8:43 am
I’ve just got this feeling that every 1st and 15th if the month the market kinda rebounds - due to influx of new money into people’s 401Ks.
My hunch is that if someone front runs the paychecks, then someone else immediately front runs the front runners, then someone front runs those front runners until pretty soon we are at the point of all the front runners having gained no advantage.
m@ver1ck wrote:
Thu May 16, 2019 8:43 am
If our kids stop investing in the stock market (or the population goes down) will the makets value just slowly decline at the time I’ll retire and start to draw down my funds?
Harry Dent wants to sell you some books.
"So, what would have been so terrible if I had a small fortune?"

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