Not only that, but they have gotten wealthier due to government intervention in the stock market. If these resources were put into the real economy, they could have helped ordinary people far more, and had a positive greater effect on the economy. You can't have a functioning economy without demand from consumers.
54% of Americans own stocks, either directly or indirectly.
While it's true that the top 5% owns a disproportionate amount of stocks, that's just a function of the wealth distribution. If everyone in the US had half of their personal wealth in the stock market, the top 5% would still own a large % of the stock market just by virtue of what it means to be in the "top 5%" today. This fact doesn't change the fact that a stock market crash would still be devastating to the middle American that owns stocks (directly or indirectly).
In fact, when the stock market crashes, it's median stock holders that are the worst off, because the wealthiest stock owners will still largely remain millionaires even if the stock market plunged.
>54% of Americans own stocks, either directly or indirectly.
But its negligible ownership stake, during the pandemic we have seen the multiple single day market swings that more than erase the collective holdings of 80% of investors. Moreover, 1% of investors own more than 33% of the market and the top 10% own >80% of the US stock market, that type of top heavy system is always bound to topple.
Yes, and that was addressed immediately in the next paragraph:
> While it's true that the top 5% owns a disproportionate amount of stocks, that's just a function of the wealth distribution. If everyone in the US had half of their personal wealth in the stock market, the top 5% would still own a large % of the stock market just by virtue of what it means to be in the "top 5%" today. This fact doesn't change the fact that a stock market crash would still be devastating to the middle American that owns stocks (directly or indirectly).
> In fact, when the stock market crashes, it's median stock holders that are the worst off, because the wealthiest stock owners will still largely remain millionaires even if the stock market plunged.
I carefully worded what I said above precisely because I knew this irritatingly misleading statistic would pop up. It always does.
54% of Americans owning at least one share isn't especially meaningful. Giving the stock market a boost doesn't help people with one share. It helps people who have the majority of their net worth tied up in it. Those people are deliberately left out of that statistic.
A stock market crash doesn't affect the median citizen the worst. The median citizen has more % of their wealth in housing than the stock market (what they do have, which isn't an awful lot) .
In percentage terms its the ultra wealthy who get fucked. And it's them who got bailed out. And it's them who love that 54% statistic.
Moreover the stock market is inversely correlated with wages as a % of GDP (money that doesn't go into wages goes into profits, which pushes up stock prices) . If wages go up and the stock market goes down that DEFINITELY helps the median citizen.
It's not "irritatingly misleading", it just needs to be contextualized — which ironically was missing in your "precisely worded" statistic.
I provided that context in the elucidation:
> While it's true that the top 5% owns a disproportionate amount of stocks, that's just a function of the wealth distribution. If everyone in the US had half of their personal wealth in the stock market, the top 5% would still own a large % of the stock market just by virtue of what it means to be in the "top 5%" today. This fact doesn't change the fact that a stock market crash would still be devastating to the middle American that owns stocks (directly or indirectly).
> In fact, when the stock market crashes, it's median stock holders that are the worst off, because the wealthiest stock owners will still largely remain millionaires even if the stock market plunged.
Just because the top 5% owns a highly concentrated amount of the stock market by nominal value, does not mean that the median American is immune to shocks in the stock market, and arguably the latter is impacted more adversely than the former.
> Moreover the stock market is inversely correlated with wages as a % of GDP. If wages go up and the stock market goes down that DEFINITELY helps the median citizen.
Stock market being inversely correlated with wages as a % of GDP does not imply that when the stock market falls, wages will rise, there is 0 evidence of that having ever happened in history. When the stock market falls, unemployment increases, so average wages fall.
The reason why a healthy stock market inversely correlates with wages as a % of GDP is because stock market increase as a % of GDP can be much higher than wages as a % of GDP. You can't take that observation then conclude that if you tank the stock market, wages will magically rise. As a % of GDP, they may stay the same, but that's just because GDP dramatically falls.
>If everyone in the US had half of their personal wealth in the stock market
Yeah but they don't do they? If you wanted to "contextualize" you could have used a statistic along these lines (not that it's true) instead of arguing that 54% of Americans own at least one $4 share so they might get fucked by a stock market collapse.
56% of all workers participate in a workplace retirement plan.
In the public sector, 83% of workers participate in a workplace retirement plan.
The median earner doesn't own "1 stock", they indirectly hold stock through 401(k)s, IRAs, company-provided pensions, or government-provided pensions. The vast majority of your pension plans are managed and administered by institutional investors.
If you are a median earner, and your defined contribution plan tanks, you will absolutely be worse off than the multi-hundred millionaire whose net worth still remains in the millions even if their ownership in the stock market falls by 90%.
