Today President Bush signed into law a bill that is designed to encourage 401K participation. There are many good points to this bill and estimates are that it will increase the number of people participating in retirement plans. The numbers are still foggy but you are looking at anywhere from 30% to more then double the current number of 401K investors.
Stocks rarely trade at what the company is worth. They generally trade at what people think they are worth – to a point. If you recall your basic Econ 101 classes, then you’ll realize that soon demand for stocks should start to rise as more new investors will be forced into the market. Mutual fund managers will have a wonderful problem of excess capital flowing in.
For those of us already in the market, and I hope that is everyone reading this site, it should be a good ride ahead. I am hopeful anyway.
Further Reading: Pension reform – Boon for 401(k)s by Jeanne Sahadi