RE: My Questions

[Michael Jones <powderfinger99@yahoo.com>]

<<<<
Second, as to modern financial markets and sophisticated money managers being 
able to construct a neutral system for centralized investment of the trust 
funds, I say nonsense.  For one thing, I'm aware of no index fund or funds in 
which the government could invest (up to $1 trillion, under one leading 
proposal) that would ensure funds were channeled into capital markets in a 
manner that would leave the allocation of capital and the distribution of 
wealth and income in society undisturbed.  Would the index be international?  
Would it include shares of stocks listed only on major exchanges?  Which 
countries would be included or excluded?  Either way, the index would exclude 
companies that do not issue stock (meaning millions of small companies and 
start-up companies) as well as other assets, such as bonds and real estate.
>>>>

Carol,

These concerns are not as important as they might seem at first.

First, regarding index funds. Index funds are not iron clad
pools of equities. They are quite dynamic. Take the Dow-30
stocks, for example. There is only one company in this index
that was there when the index was first created. The index fund
managers change the member companies quite often as companies
falter and as others emerge.

Index funds run the gamut of small, mid and large cap companies,
which covers companies of all sizes in the economy.

Think about this for a moment. Would you really want to invest
retirement money in a company that didn't issue stock? Companies
that issue stock are not only selling their company to the public
, but also are putting their books out for public scrutiny.
Publically traded companies must adhere to government regulations,
accounting standards and reporting requirements. Now, these
safeguards don't prevent all abuses, but shouldn't there be
these minimal regulations for long term pension money? I think so.
There are non-public investments which are worthwhile, but they
should not be considered for long term pension investments.

Michael