As the economists keep telling us, the market isn't the economy. True, I suppose, but if you're a retiree living on a 401K or a 403B, it sure as hell is your economy.
Some are blaming recent market losses on China. Some are blaming low oil prices. Some are blaming the Fed's .25% increase in the Federal Funds Rate last month. (It wasn't the Fed. There's no way a quarter per cent above, essentially, zero, could have such an impact.)
Others are pointing to "volatility," suggesting that January's big dip in prices is just a temporary glitch. We'll see. On the other hand, there are things that can be done to reduce "volatility" and its impact in the future.
One surefire policy choice would be passing a Tobin Tax, sometimes called a "Robin Hood tax" — a very small tax on every financial transaction. It would probably put the brakes on a lot of the high-frequency trading that exacerbates volatility. Bernie says the proceeds would be enough to finance free college tuition for all.*
The other change would be policies to encourage a return to fixed-benefit pension systems, so retirees don't have to ride the market roller coaster. Professional money managers would be in charge of their pension funds, just as they are with 401K funds, but pensioners would be freed of the stresses of market swings. Needless to say, this would require that pension funds be fully funded, and not subject to raids by municipal and state governments nor corporate fat cats.
Any money manager who is a consistent winner in the markets either is preternaturally lucky or engaged in insider trading, so with proper regulation, fund incomes should average out over time. Requiring contributions to an insurance fund that could bail out funds that are managed by the preternaturally unlucky would provide a safety net.
I know it all sounds highly unlikely, but most of it is feasible if the political will can be found.
*Those who claim we can't have free tuition because we don't want to subsidize rich people are talking out of their asses. The rich will continue to send their kids to top-ranked private schools. Donald Tr*mp's son will not be attending CUNY!