Stock market and social security

Posts: 146

1. Winner's gain is from loser's.

A farmer planted a seed. He sold the fruit The famer created a wealth.
A worker produced a car. He sold the car. He creates a wealth.

Investor A bought one hundred shares at 1.00/share. The company got one hundred dollars to pay rent, wage and material. Then the stock market rose to peak. Investor A sold the share at 1.10/share to investor B. A got 110 dollars. He made a 10% profit. But was that 10 dollars created? No. it was B's loss. When B bought the stock from A, he became a potential loser. What he bought was only a piece of paper. He couldn't cash the stock with the company which issued it. What B can do is hoping some one else to take over the potential loss.

Situation 1. If the stock is Enron, then when it went bankruptcy, B's stock worth nothing. Here Company got 100 dollars. A got 10 dollars. B is the loser. He lost 110 dollars. Winners' money is from loser's. It's evidenct.

Situation 2. If the stock is HP, then in trough, the share price may fall to 0.90/share. B sold it to C. B lost 20 dollars. C paid 90 dollars for 100 shares. C sold the stock in peak 2 at 1.20/share to D. Now D becomes a potential loser. If nobody has the will to buy his paper, then the stock worth zero. Now let's see, company got 100 dollars. A sold stock at 1.10/share. he made 10 dollars. B bought at 1.10/share, sold at 0.90/share. B lost 20 dollars. C bought at 0.90/share and sold at 1.20/share. C won 30 dollars. 10(A) + 30(C) + 100 (company) = 20(B loss) + 120 (D's potential loss)

The eqation: Winner's gain(profit) + Capital gain (Company issue the stock) = Losers' loss (loss) + Potential loss (Amount paid by the latest stock holder)

You can see there is no wealth created. How much winner got is how much loser and potential loser lost. And it doesn't include administration fee. (it's about 2 trillion in 10 years period, Re: San Jose Mercury News, 12/17/04) So when Bush say you may get better income in stock market, there must be some people bear the loss for the winner's gain. Whom do you think will be the loser and winner?

(I omit the dividend here. it's similar to interest paid by bank.)

Posts: 146

2. Stock is no other than a piece of paper

The value of stock market is supported by continue coming of investment fund. One thing you should know the people who hold the stock is no other then hold a piece of paper. That's a bubble. When no money came, then the bubble will break up.

When you deposit 100 dollars in the bank, you are guaranteed to get that deposit back, plus interest.

When you buy one hundred dollars of shares of a company, you are told you probably get some dividend sometime if business is good. The dividend is not guaranteed. And you can not cash the stock with the company. Because they have spent it to pay rent, wage and equipment already. If you liquidate the company, most time you may get a negative asset. e.g. if it's Microsoft, what they left for you is a program of Windows. UA may have some airplanes. But they always come with a huge debt. What kind of asset do Kodak and McDonald have for the stock they issued? What you hold finally could be a piece of paper. What you hope is someone else would buy that paper from you to take over your potential loss. When people put all their retirement fund in stock market, they are sitting on a big bubble. All they hold is a bunch of paper. One day when people wake up and refuse to behave like a fool, then there will be a collapse of stock market.

What Bush does is to persuade people put their retirement fund into the market to take over the hot potatoes.

Posts: 146

3. The stock price depends on the amount of investment fund.

If monthly trade stock is 100 shares, ($1.00 each) the investment fund in that month is $110, then the share price will be 1.10 each, it's a 10% rising market. If there is only $90 fund go into the market, then the price will be $0.90 each. A falling of 10%.

More fund is needed to support a growing up market.
For decades, the index of US stock market went upwards. It created a fake phenominon that if you invest in long term, (e.g. 40 years) you got a good return. That's the justification someone like Bush used.

But if you know the above principle(a rising market depends on increasing investment fund) you must know that it was built up artificially. The US stock market growing up at public's pension fund. At first, Different pension fund push up the stock market. Then financial group created mutual fund in 1970s(?) which put your savings into the stock market. When it was not enough they invented "IRA" in 1980s which push another amount of retirement fund into the stock market. Further more, in 1990s, government allowed 401(k) to access the stock market. Wave after wave, Americans' retirement money were pushed into that gambling market. It became a big bubble.

But money was harvested by company and winners already. What public held are only a bunch of papers. When people want to cash their 40 years long savings, (they think they have a bunch of treasures, but that's only a paper value) Who has the ability to take over that big bubble? It needs a lot of new investment fund to support it.

That's why when government exhausted your money by "pension fund investment", "IRA", "401(k)" the last exit is your social security

Posts: 10

This is too complicated for me that only a genius can understand.

Posts: 146

4. The reverse point

As I have said, a growing up stock market must be supported by increasing investment fund. A $100 market grew up 10% in first year with $110 investment.Next year, to support a $110 market growing another 10% up, you need $121 new investment fund. And $133 for the third year..... To blow a ballon bigger, you need more air.

That's what happened in past 40 years. It's a process of how babyboomers cast their retirement fund into the stock market. It's a process how babyboomers exchanged their treasure(retirement fund) with papers (stock shares). When I said potential losers hold a bunch of papers, I mean the stock paper may lose value any time. (Unlike the certificate of CD which banks guarantee to cash or Grand deed of a house that you have a house, no one has obligation to cash your stock certificate, the only interest(dividend) was often cancelled in the name of re-investment by company)

Now it goes to a reverse point. The first generation of babyboomers reach their retirement age, they will not put money in pension fund any more, instead they will cash the stock in their portfolio for their retirement spending. If the market was originally at 10% growing up step, ($100 stock with $110 new investment fund) now it will be a staggering market or a recess market. The new investment fund becomes 105,(due to less retirement fund) the stock for sale becomes $105 (more old people cash their portfolio), then the stock market stagerring with no growing up. Or a recess, $100 new investment fund with $110 selling stock. Market will fall at 10% rate. (depends on retirement rate)

The World War 2 ended in 1945. The first generation of babyboomers were born in 1946. If the legal retirement age was 63, 1946 + 63 = 2009, then starts from 2009, same problem face to Social Security will face to stock market. Less working people contribute to pension fund, more old people to cash portfolio. A long term growing up stock market will become a long term recess market. The fairy tale will break up.

That's why Bush set the date of his privitization of S.S. in 2008. To save the stock market from collapsing. And deliver the bubble at the cost of young people's retirement fund.

Posts: 146

5. Bush's privatization plan will endanger S.S. further (5/22/05)

(1) "In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes," Bush said.

So in 2018, it will be a break even year.

If the S.S. payroll tax is $100 in 2008, the actual benefits paid to old people are $90, then there will be $10 surplus fund go to save in current account of S.S. This trend will go on until 2018.

But when Bush's plan is carried out, about one third of S.S.tax will go to the privatization account instead of S.S.current account. The calculation is: 35/42 x 1/3 = 0.27. Here I suppose the working years of people are 42 years.(also the period they pay tax. If their work start from 20 years old to 62 when they retired.) the rate of people who enjoy privatization are 35. years. (20 years old to 55 years old which Bush said enjoying privatization)

So $27 would go to privatization instead of S.S.current account. There is only $73 left to pay retired people while they were promised $90. The $17 shortage will have to take from the S.S. saving portfolio. The break even year will be in 2008 instead of 2018.

Bush should say, "In the year 2008 when my privatization plan goes, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes,"

Bush's plan accelerates the collapse of Social Security and directly endanger the old people who depends on S.S. benefit.

(2) Administration fee. Estimated 2 trillion in ten years period. It will either come from S.S. tax or from an additional tax from all tax payers. One thing for sure is it won't come from the pocket of Bush and his group. Another thing for sure is it will go to the pocket of financial group.

Quote, "Economists opposed to Bush's plan say the 10-year, potential $2 trillion cost of shifting to individual investment accounts is reckless and would require such a huge increase in government borrowing that it could destabilize the nation's economy. " ("Social Security change pitched" Mercury News 12/17/04)

Quote, "Social Security spends 1 percent of its money on administration. But administrative costs for private insurance range between 12 and 14 percent, according to the American Council of Life Insurance. In Chile, which instituted a system of mandatory private savings accounts in the early 1980s, administrative costs exceed 20 percent. This is your money, going straight into the pockets of Wall Street. "

http://www.thepetitionsite.com/takeaction/504620720?z00m=20239

Before you gamble in Casino, you lose first with a fee about 15% to 20%.

Posts: 146 · 6. Average investor in stock market (6/2/05)

6. Average investor in stock market (6/2/05)

Everyday, in debate of Social Security privatization, I always encounter with the argument, "Historical, the stock market offered 10% returns over the long haul (40 years)."
Or "average S&P goes up 10.5% each year. In latest two years went up 50%."
It seems there is a strong reason to invest in stock market. 10% return each year, what a brilliant figure. Yet it's a gimmick.

The flaw for this theory is that high return from stock market doesn't mean high return to average investors. But Bush never talked about this. And seldom media talked about this too. One day I finally found a data about the return of average investors. And found why media and government avoid this topic, the most important topic. Read this:

Quote, "Over the past 20 years, the average investor in mutual funds that hold stocks earned almost nothing once inflation was taken into account, even though stocks enjoyed terrific gains.

These are among the results of the 12th annual study of investor behavior by Dalbar, a Boston financial-research firm.

The study found stock-fund investors had returns averaging just 3.7 percent a year from 1985 through 2004, while the Standard & Poor's 500 index returned 13.2 percent a year. Annual inflation averaged 3 percent, chewing up most of the investors' gains." ("Break the buy-high, sell-low pattern" S.J. Mercury News, 5/8/2005)

http://www.philly.com/mld/philly/business/columnists/jeff_brown/11311526.htm?template=contentModules/printstory.jsp

There did is high grow up of S & P index, there was also a low return for average investors that almost was nothing if considering inflation.

Average people don't care about the high index of S&P. They care about thier return. Where did the money go? It went to the firms which control the market.
To my equation, (suppose the stock is S&P index, oringinal price at $100, in 10 years period)

37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)

One thing I should remind you that this is the result of mutual fund. Though there was little gain, the average investors haven't lost its capital because the fund was managed by expert. What if there is a real "privatization", average investor does it individually?

Here is a story again seldom to be reported.

Re: This is a problem that is beginning to be recognized. Since 1964 Nebraska offered state employees the chance to manage their 401(k)-type plan. Extensive employee education and training seminars were given, and everyone expected outstanding investment returns. But when the state audited the program in 2000, the results were incredibly discouraging: employees were making bad investment after bad investment. So in 2003, Nebraska eliminated employee choice from its 401(k) plan.

From: NewCartesian

http://forums.washingtonpost.com/wpforums/messages?msg=2800.351

Hardly a gain (with expert) or a loss (invest by yourself even being trained), that's average investors' encounter in stock market.

The most important thing is this happened in a grow-up market. That more and more pension fund were guided into the stock market. Yet, average investors had such a poor result. What if the trend reversed? (When the fund lured to support stock market is exhausted like what I said in "4. The reverse point"?)

Of course, Bush will never tell you this. Otherwise, how can his group get fatter without your fund joining in?

Posts: 338

Good post, make sence Smile

Although stock market is like playing russian roulette with your money!!!
Only the big boys with inside info on big companies make money!!!
Thus i stay well clear of the stock market
cheers
chris

Posts: 146

A myth about wealth

question, "I don't think your equation works very well at all.
It is like owning a house. If you do some landscaping and renovations, and keep up with repairs, your house will likely appreciate in value over time. This does not mean you have benefited at the expense of anyone else. Investing in stocks works the same way. The company reinvests most of its profits in expansion and improvements; if they do this wisely then the company will grow in value. It is not the zero sum game that you suggest it is."

-----------

Answer: You still haven't told us how the wealth created in winners' gain. The sample you given is a misleading of company's activity with stock trading. A company of course must work hard to earn a profit so it can distribute dividend to investors. They plant, produce, or do a house repair as you said. It doesn't related to stock trading. The wealth company created was used to distribute dividend. When you said company reinvested its profit in business, that means company diverted the dividend investor deserved to re-investment. You know there had been a period that Microsoft holding the profit and hadn't distribute the dividends to the stock holders. That is typical story fits your "company grow in value". But it belongs to the category of dividend distribution. I have said the dividend is the same thing like interest paid by bank to its investors. There is totally nothing related to the profit gain in stock trading. If you want to know where the profit of winners came from, go to my eqation. It is from the losers and potential losers. Your profit always came from the money paid by later buyers not the company. Or you show me where it came from.

My equation: Profit( stock winners gain)+ Capital gain(Company issued stock) = Loss(losers) + Potential loss (One who hold the stock)

Or to satisfy you: Profit(stock winners gain) + Capital gain (Company issued stock) + Capital gain 2 (Company re-invest with money originally should be used as dividend) = Loss (losers) + Potential loss (One who hold the stock) + Loss (Investor loss of dividend)

That Capital gain (company re-investment) is always equal to Investors' loss of dividend. It should belong to the category of dividend. (I omitted it because it is similare to interest)

Posts: 146

S.S. is Social security not Social risk

BOOMERJEFF said,
"Your equation leaves out the human creativity/innovation/invention/management element.

For example, Cell phone Co may have invested $1 million on R&D to develop the ability to take pictures. They may invest $2 million in a factory to make the new phones that take pics.

.....

So, the $3 milion invested in the picture phones could generate much more profit than $3 million invested in phone-only phones, or $3 million invested in improved pots and pans, or $3 million invested in improved lawn mowers. Thus, the market value - not your theoretical book value - of the picture cell phone stock will rise many times as much as the market value of stock in the phone-only cell company, or stock in the pots & pans company or stock in the lawn mower co.

===========

When the debate starts, I always encounter with arguments like above one. It used to be:
1. They use unique sample to cover all.
2. Businees belong to dividend category but they mix it with stock trading.

My Answer

1. A new technique will make big money, that's true. It used to be invested by V.C. (venture capital). When one such technique succeeded, there may be 9 others failed. V.C. may invested in 10 companys with one million each. One company succeeded and 9 others failed. The average return is still flat.

Or in stock market, 10 people invested, one made high return like you said, the others suffer a lost you don't mention at. The average return you avoid to talk is still low.

As a matter of fact, it's like the propaganda of gamble business. They say every week there is a millionare prize winner. That the critics neglected the lucky element(in your word, "creativity/innovation/invention/management element.)

Here we talk about average return. Not a lottery. And that average return of stock market for ordinary people is almost nothing consider to inflation. I have that fact in message "6. Average investor in stock market" in this forum.

2. The profit still came from potential loser.

In your sample. If the stock price went up 5 times to the original one and you sold all the stock, then to my equation: 12 million (profit gain by original investor)+ 3 million ( Capital gain of phone company)= 15 million (potential loss of new investors who bought the stock)

Remember the profit gain in stock market is always from the buyer. Because however a company successful the money paid to stock trading is always from the stock buyer (potential loser) not the company.

Then you may ask where is the value created by "human creativity/innovation/invention/management element" goes?

It reflects in dividend distribution. And it used to be a flatened one because such success is always be in consideration when the stock was issued. In another word, the profit was gained by inventors and VC capitalist. (VC capitalist must average the profit with other failed cases) Have you ever heard a company paying dividend equal to its stock price, or even 50% of it? So far as I know, the average dividend is close to the rate of interest bank paid to its customers.

Of course, I always talk about average not lottery or unique accidence. Social Security is a system to guarantee most people have a minimum income when they retired. Not to put them in a risk life when they get old.

Posts: 146 · 7. The point is they need fund to save stock market (6/20/05

7. The point is they need fund to save stock market (6/20/05)

In my illustration equation in message 6: (based on fact that the return of average investor was 3.7%, and average return of S&P was 13.2% each year)

37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)

to maintain a high return rate in stock market, special interest group needs more and more fund. In that equation, it's the amount 232 paid by potential losers. Next year, to maintain a 13.2% grow up rate, they need 262 new fund from potential losers. So far it works well becasue they successfully guided the pension fund, then IRA, then 401(k) into the market. But once those who invested in stock market with their pension fund want to cash their portfolio who has that big money to take over the stock papers? They turn on to your social security.

2018 is the year when paid S.S. tax will be less than the benefit paid to retirees. That's 13 years away. 2042 is the insolvent year for S.S. That's 37 years away. Why Bush is so eager on this issue? Because the stock market will have problem in 2009. That's 4 years away. Bush's privatization plan is not to save Social Security, (on the contrary, it endangers S.S.. See message 5. Bush's privatization plan will endanger S.S. further (5/22/05)) It is to save the stock market. The sacrifice is young people's retirement fund.

Back to my equation, when potential loser paid 232 for a stock paper, the money has gone to the winners' profit gain and company's capital gain already. When potential loser wants to cash his stock paper, who has the money to take it over?

That's why Bush and his accessaries bang the drum to propaganda on "high return in stock market" (it's a gimmick, see message 6. Average investor in stock market) to lure people to invest their money into the stock market to take over the hot potato.

Bush's plan is opposed by majority people. But he tries to play with tricks. whatever the new plan he proposed, one thing is for sure: 1. He needs money(fund). 2. The money is from Social Security fund. 3. And that fund will be put into the stock market to save it from collapsing.

Posts: 146 · 8. The game is who will be the potential loser (7/19/05)

8. The game is who will be the potential loser (7/19/05)

First of all. People should recognize the difference between average return of stock market and average return of stock investors?

The Dalbar research gave you the result: In latest 20 years, 1985 to 2004, (2005 not finished yet).

Average investor's yearly return: 3.7%. (ordinary people)
Average S&P 500 index yearly return: 13.2% (stock price gain)

Get clear the idea of "average investor" and what happened to the difference between 3.7% and 13.2%.

Nobody deny the high return of stock market, only it belongs to special interest group not ordinary people.

I emphysize the average investor's return: 3.7%. Because S.S. is about the interest for ordinary people - the average tax payer, not for the special interest group. And my equation tells where the money went.

37 (average investors gain in 10 years) + 95 (special interest group gain in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)

This is how Bush and his S.S. war room show to people:
132 (total profit made in 10 years) + 100 (capital gain of S&P company) = 232 (price paid by potential loser after 10 years)

They mix average investor with special interest group.

And this is how ordinary people got in stock market in latest 20 years, almost nothing (in mutual fund) or a loss (401k in Nebraska). A rare data leaking from government censorship net.

Bush and his group only blow the trumpet on that 13.2 but leave the "3.7 and loss" alone.

One thing very important is this took place in a rising stock market. Investor should have a rich profit, yet the result is poor. Where the profit came from? Stock market won't create wealth. It came from potential loser. From 232 paid by new buyer.

In the chart of S&P 500 index, we can see there are two obvious expanding period. The index rose from about 200 to 500 in 15 years. (1980 to 1994) This is the time when pension fund and IRA introduced into the market. And index rose from about 500 to 1200 in 10 years (1995 to 2004). It reflects that how the investment fund baloons the price of stock market.

I made a rough metaphor to make it easy to understand: The original invetor had a stock worth $200 for 30 years, then government introduced a new buyer, Pension and IRA. Pension and IRA paid $500 in 15 years and had the stock price being $500 in 1994. To make market a prosperous one, government found another big buyer, 401(k). 401(k) is a rich man, in 10 years, he raised the market by $700 to $1200. 401(k) now has no extra money to raise the market. (401k paid $1200) G(government) promised it can double in 10 years. But who has that much money to double the price to $2400? G now is in a hurry, the only one he can find is S.S.. S.S. has that ability to boost the stock market, but the problem is 10 years later, when S.S. intends to sell the stock, who has that much money $4800 to take over the hot potato? After all there will be an end. That's how a potential flood developing into a tsunami.

Bush doesn't care. What he wants is at current he and his group can make money. He borrows to pay the bill. (He cut tax by issuing national bond, you people pay it later) He spends at your debt. When crisis break out, he is not a Presidnet any more. Or even he is not alive then. Young people will bear the loss.

Posts: 146 · 9. How to blow a balloon bigger (7/29/05)

9. How to blow a balloon bigger (7/29/05)

If the paper value of the whole stock in maket is 20 t (trillion), then there may be only 1 t stock is active in trading. The rest stock is inactive (sleeping stock). Because some owners hold it to control the company; some owners hold it as long term investment. (mostly the people hold it as retirement investment)

Only a little fund can change the whole value. When there is 1.1 trillion investment fund entering the market and caused a 10% increase on 1 t stock, the rest sleeping stock(19 t) felt their asset increased by 10% too. That's how a baloon is multiplied by 19 times.

So there are two ways to increase stock market value.
1. To increase the investment fund in the stock market. This is what government has done to push the pension fund, 401(k) fund into the stock market. And Bush is doing now to put S.S. fund to the market.

2. To reduce the stock for sell also can raise the stock price.

When the money supply is 1 t. But the supply of stock for selling increased to 2 t, then there will be a 50% drop of price.(1t fund/2t is 0.5) Original $1.00 share can only get $0.50. If the stock for selling reduced to 0.5 t. Then the price will double. $1.00 share can sell for $2.00. A 100% increase. (1t fund/0.5t is 2) Reduce the quantity of stock for selling is a more effective way to boost the price.

This is why Bush's plan allow the privatization fund heritable. Old people would have sold the pension stock because it's foolish not to spend it before their death. Now they will think, "if I have no necessity to sell it, whatever happen to me, my son will have it." The inactive stock will go on sleeping. There will be a significant quantity of stock avoid to be sold in the market.

While a small amount of investment fund (say, 1t) support a fantacy of a big treasure ballon (say, 20t), interest group hope more people sleep on the paper stock to go on with their dream. So it will make them easy to blow the balloon bigger and delay the crisis from exploding.

Posts: 146

10. "Sleep with the stock paper", better forever(8/9/05)

When I have learned the rare data about average investor's return (3.7%), I was surprised that how such a data could be leaked from a tight censorship net of Inside Group.They want people sleeping in the dream that stock market is a gold mine with high profit gain.

A lot of people thought because company having a good business, so stock could be sold at a higher price. That the profit of stock trading was from the wealth comapny created. It's wrong. The wealth company created were distributed by dividend. Even some CEO re-invest or buy back the stock, the money they spent is still a steal from the dividend that shareholders deserved. The reality is sellers profit (or loss) came from the money paid by buyers not from company.

If a company had a profit margin at 1.00/share, and stock price was $10.00, when it makes 1.20/share next year, should the stock price be raised to $12.00? Not neccessarily. When buyers is tight with money. It could be still $10.00 or even a loss, $9.00. It depends on the supply and demand - the stock for sale and new fund willing to invest.

The Nasdag collapsing in 2000 is such sample. When Inside Group thought it was time to harvest, they poured out the stock they held. The investment fund couldn't maintain the usual price, a collapse took place. Did high tech. business had trouble then. No, they still made same profit as usual. But when there was not enough fund going to the market to buy increased amount of stock for sale, the stock price dropped to the bottom too. Nasdaq index lost 2/3 from 5000 to 1700. Those who slept with stock paper with the dream of high profit gain lost their most. The loser is always average investor.

I re-read that "Break the buy-high, sell-low pattern". I found the point of article is: "And that's where some of the good news comes in. Investors slowed the rate of redemptions last year to a pace that would lengthen average stock-fund ownership to 4.2 years. (the 20 years average is 2.9 years) " It advised that if people could hold the stock longer, the return would be better. So in the end it wrote, "As a long-time practitioner of dollar cost averaging, I can note one other benefit: You don't have to make a lot of decisions and you don't second-guess yourself. So you sleep better."

The purpose of the article is clear. With the release of data, it wants you hold the stock not for trading. The longer the better. In last message "9. How to blow a balloon bigger" I've told of the best way to boost stock price is to reduce the quantity of stock for selling. It will make them easy to blow the balloon bigger and delay the crisis from exploding. That's why Inside group want you "don't make a lot of decisions and sleep" on that paper. Better forever.

Posts: 146

11. Squeeze every bit of your retirement fund to support a stock market balloon.

Read my message "9. How to blow a balloon bigger" you know There are two ways to keep stock price from falling. The two articles from Mercury News show how this government and the media they controlled are working hard to push every bit of money to the stock market to keep the balloon from exploding.

1. One way is try to find every bit of money available in 401(k).

Re: "Automatic enrollment in 401(k) plans is endorsed

Workers must choose not to contribute

By Jack Sirard, Sarcramento Bee

..... Studies show that up to 20 percent of employees who are eligible to join theri
comany's 401(k) plan fail to do so.

..... Automatic enrollment, which is a growing trend nationally, changes a worker's decision from having to choose to join a 401(k) to having to choose not to join. "
(Mercury News, 7/24/05)

Thus the 20% workers who haven't made up their mind are automatically being pushed into an investment pension fund.

2. The other way to keep the stock price from falling is to reduce the stock for selling.
Re: "Almost half of job-switchers cash out 401(k)s

By Kaja Whitehouse, Dow Jones

Almost half, or 45%, of all workers who left their employer last year opted to cash out their 401(k) savings, according to a new study. .....

Employers would often force distributions for accounts worth less than $5,000 because they found them too costly to maintain. .....

Under the new rules, employers are required to either maintain small balances - defined as anything between $1,000 and $5,000 - or automatically roll the money into an IRA when workers depart. This way, workers with small balances will only take their money in cash if they take the initiative to do so. "
(Mercury News, 7/26/05)

This is how they push workers to join 401(k) investment plan, and try their best to prevent workers from cashing their 401(k) portfolios, even if it's a small amount.