Yes, but sell to whom?
We're talking about a distressed sale of American NYSE equities. Even if the government could do such a thing, what would be the impact to the companies? What would happen if their stocks were suddenly sold off en masse at reduced prices at the whim of the government?
Furthermore, lets assume that all corporate stocks held in retirement accounts are subject to this; the conclusion is that Americans cannot buy American stocks being sold by the government, because those stocks were initially held by American investors in the first place. So what happens? Will these stocks be sold to foreign investors?
Would Congress really sell the NYSE off to foreigners, destroying American ownership of its largest corporations?
Or am I exaggerating, and something else would happen?
-PJ
Political Junkie Too wrote: “Yes, but sell to whom?”
The vast majority of 401 K assets would not need to be sold. I would imagine the ‘Government Retirement Fund” would hold something similar to a S&P 500 fund and some government bonds. In fact, I would bet the government would transfer these assets to investment brokers like Fidelity, etc. Of course they might have to make some adjustments to match the SP500 but that could be managed. In effect, this would be a transfer of ownership rather than a liquidation of assets.
When I posted my response I assumed you were referring to smaller companies, not a SP500 component. Equity in those companies would probably be sold over a period of a few years to minimize impacts.