Newsletter – July / August 2009 – Pension Plan Blues

Pension Plan Blues

The buzz words of the 1990’s mutual fund and high tech boom were: “Buy and hold blue chip stocks for the long term.” Baby boomers were saving and investing and driving the stock markets higher and higher. And soon the boomers would be inheriting “the biggest transfers of wealth in the history of the world,” as their aging parents passed on. And, of course, all this money was destined for the stock market too. Do you remember those days?

My, how times have changed. In those days, we were told that governments would not be able to pay for the Canada Pension Plan and we had to rely on ourselves. Now we are told that many pension plans are no longer able to meet the retirement needs of the contributors. In those days, we were told that we needed to rely on the ingenuity of corporate America to provide for our needs when we retire: we should buy stocks of those corporations and hold them for the long term. Now, taxpayers and governments are bailing out America’s ingenious corporate dinosaurs. And the long- term return of a typical portfolio of blue chip stocks is near zero.

The stock market game has changed and we have to change with it.