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>There seems to be a lot of disdain and calling it a "rigged" system that makes the rich richer Based on current evidence world over, it does appear the case.

>There seems to be a lot of disdain and calling it a "rigged" system that makes the rich richer Based on current evidence world over, it does appear the case. I know of no one either famous or even within my social circles who's become rich solely by investing in the markets alone. Unless one has deep domain expertise within a sector or has information to which they're privy, it is unlikely one will earn returns that significantly outweigh the market in the medium to long term. So, yes, it is not hard to imagine that equity wealth is concentrated among an elite few who also have an incentive to not let newer members in to improve their own returns.

nugget 10y ago
> it is unlikely one will earn returns that significantly outweigh the market in the medium to long term Do you need to beat the market to become rich? What about just earning the market return (SPY, VTI, or similar), over a 30 or 40 year time period? I know plenty of older folks who 'got rich slow' this way. Granted, historical returns might not be there for millennials in the next few decades, but it's still the best bet there is.
- riemannrocker 10y ago
  No, but you need to have a decent income to invest, which most people don't have.
  - sacado2 10y ago
    Yet most people have cable TV (and/or a gym membership they never use).
- kurthr 10y ago
  You need to be in the market to maintain buying power with stagnant wages and increasing costs. Most people do not have $400 for an emergency so they aren't participating in the market. And if you have to borrow to buy a house/car or buy health insurance, then you are paying those richer than you to exist, their rate of return will continue to be higher than yours, and wealth inequality will continue to rise.
  - briandear 10y ago
    People don't have $400 for an emergency but they have smartphones, Jeezy shoes or various other random unnecessary crap. People don't have $400 for emergencies because they choose not to. Look at Black Friday sales -- people seem to have $400 to fight over TVs or game consoles. Even the really poor in the US seem to find money to buy TVs or subscribe to cable/satellite TV. Visit any public housing complex in America and there is a large number of homes with Satelite dishes. I am not saying there's anything wrong with that but I am also saying that people do make choices. I am not a particular fan of Warren Buffet, but he's a billionaire and lives far more discretely than your typical 5 figure "millionaire" who's driving a leased BMW and drinking Grey Goose at the club. Certainly there are actual poor; that's not in dispute, but the middle classes typically just prioritize things differently -- which contributes to their station.
    - sacado2 10y ago
      This. We (especially you US citizens) have never be that rich ever in the whole history of mankind. Yet people keep complaining life is tough. I don't get it. But who wants to live his grandparents' life ?
- codecamper 10y ago
  It's the best there is... IF you believe that the market will continue to grow. A lot of people think that we are hitting very high valuations now.
- closeparen 10y ago
  >What about just earning the market return (SPY, VTI, or similar), over a 30 or 40 year time period? This is not "becoming rich," it's table stakes for retirement, and a necessary (but not sufficient) criteria for being middle class.
prostoalex 10y ago
> know of no one either famous or even within my social circles who's become rich solely by investing in the markets alone Contrary to what late-night informercials on CNBC portray, people in that position keep their mouth shut. Here's a profile of Robert Mercer, for example https://www.nytimes.com/2015/04/11/us/politics/hedge-fund-magnaterobert-mercer-emerges-as-a-generous-backer-of-ted-cruz.html https://www.nytimes.com/2015/04/11/us/politics/hedge-fund-ma... "Mr. Mercer told the audience he was daunted by the prospect of speaking there for an hour, “which, by the way, is more than I typically talk in a month so it’s quite a challenge.”" Here's another random scientist growing his savings into $14 million portfolio http://articles.latimes.com/2010/jan/07/nation/la-na-scientist-murder7-2010jan07 http://articles.latimes.com/2010/jan/07/nation/la-na-scienti... If you have a major win in the market, you likely have an edge. Publicizing your egde will only draw the attention of pesky competitors trying to reverse-engineer your strategy.
vinceguidry 10y ago
The market does not exist to make anyone rich. The math never works out. Desperate and clueless people delude themselves into thinking otherwise, and more reasonable people use the market as a glorified lottery ticket. All of these people are missing the point. The only people that could ever meaningfully participate in the market are those for whom 6-10% returns on their income vs. 2-3% are meaningful. Everyone else needs a larger return, the stock market cannot and never will offer the kind of return on investment that a job or business can offer. Stock markets encourage liquidity of capital. They are instruments by which hungrier, but still large investors can take money from their more well-heeled contemporaries without having to resort to ugly political action. There are only two financial investments that really make sense from a personal point of view, mortgage loans and retirement. Mortgages make sense because it's an accessible form of leverage, take the leverage out of the picture and everyone would rent. Retirement makes sense because it's the only other scale people operate at where single percentage point differences in return make a real difference. Otherwise we'd just put all our retirement funds in a savings account. I'd say you need a few million in the bank before financial investment starts to look better than hunting for business deals. Sure, financial investment is less risky, but savvy players can de-risk by studying the market.
- ejanus 10y ago
  This is great.... Thanks. I figured it out last month while comparing my business returns against stock .
Godel_unicode 10y ago
I wonder if you realize that the market return people are trying to beat is effectively the average return over some period, and therefore you're saying that on average people don't get above average returns? Also, as others have said on this thread, using compounding it would be possible to do extremely well without beating the market.
cmdkeen 10y ago
You would be very, very surprised how few people are trying to pick stocks that they will hold for years and want to beat the market. Despite that being the generally agreed point of "investing" over speculating. I'm including active investors as well as individuals in this, short termism is very prevalent, partly because people chase the fund that outperformed over the last X months. There is a small extent to which the drawbridge does get pulled up. Successful funds can close themselves to new business simply because they have too much money / clients for either their investment or client relations capacity. If a fund owns 4.9% several of its key investments then you can't admit new money without altering the balance of the fund and thus affecting the existing investors.
roystonvassey 10y ago
Just to address a few comments, I meant it's hard to beat the market i.e. have your investments grow faster than the benchmark index. That's a different matter than 'growing rich' or 'doing well'. Sure, you can and in fact, after burning my fingers, all my investments are in index funds too. But, my point referred to the original comment that the system isn't rigged. There's a high probability it is and because of how capital and information flows work, there's a select few who will benefit instead of a wider majority.

nugget 10y ago

> it is unlikely one will earn returns that significantly outweigh the market in the medium to long term Do you need to beat the market to become rich? What about just earning the market return (SPY, VTI, or similar), over a 30 or 40 year time period? I know plenty of older folks who 'got rich slow' this way. Granted, historical returns might not be there for millennials in the next few decades, but it's still the best bet there is.

riemannrocker 10y ago
No, but you need to have a decent income to invest, which most people don't have.
- sacado2 10y ago
  Yet most people have cable TV (and/or a gym membership they never use).
kurthr 10y ago
You need to be in the market to maintain buying power with stagnant wages and increasing costs. Most people do not have $400 for an emergency so they aren't participating in the market. And if you have to borrow to buy a house/car or buy health insurance, then you are paying those richer than you to exist, their rate of return will continue to be higher than yours, and wealth inequality will continue to rise.
- briandear 10y ago
  People don't have $400 for an emergency but they have smartphones, Jeezy shoes or various other random unnecessary crap. People don't have $400 for emergencies because they choose not to. Look at Black Friday sales -- people seem to have $400 to fight over TVs or game consoles. Even the really poor in the US seem to find money to buy TVs or subscribe to cable/satellite TV. Visit any public housing complex in America and there is a large number of homes with Satelite dishes. I am not saying there's anything wrong with that but I am also saying that people do make choices. I am not a particular fan of Warren Buffet, but he's a billionaire and lives far more discretely than your typical 5 figure "millionaire" who's driving a leased BMW and drinking Grey Goose at the club. Certainly there are actual poor; that's not in dispute, but the middle classes typically just prioritize things differently -- which contributes to their station.
  - sacado2 10y ago
    This. We (especially you US citizens) have never be that rich ever in the whole history of mankind. Yet people keep complaining life is tough. I don't get it. But who wants to live his grandparents' life ?
codecamper 10y ago
It's the best there is... IF you believe that the market will continue to grow. A lot of people think that we are hitting very high valuations now.
closeparen 10y ago
>What about just earning the market return (SPY, VTI, or similar), over a 30 or 40 year time period? This is not "becoming rich," it's table stakes for retirement, and a necessary (but not sufficient) criteria for being middle class.

prostoalex 10y ago

> know of no one either famous or even within my social circles who's become rich solely by investing in the markets alone Contrary to what late-night informercials on CNBC portray, people in that position keep their mouth shut. Here's a profile of Robert Mercer, for example https://www.nytimes.com/2015/04/11/us/politics/hedge-fund-magnaterobert-mercer-emerges-as-a-generous-backer-of-ted-cruz.html https://www.nytimes.com/2015/04/11/us/politics/hedge-fund-ma... "Mr. Mercer told the audience he was daunted by the prospect of speaking there for an hour, “which, by the way, is more than I typically talk in a month so it’s quite a challenge.”" Here's another random scientist growing his savings into $14 million portfolio http://articles.latimes.com/2010/jan/07/nation/la-na-scientist-murder7-2010jan07 http://articles.latimes.com/2010/jan/07/nation/la-na-scienti... If you have a major win in the market, you likely have an edge. Publicizing your egde will only draw the attention of pesky competitors trying to reverse-engineer your strategy.

vinceguidry 10y ago

The market does not exist to make anyone rich. The math never works out. Desperate and clueless people delude themselves into thinking otherwise, and more reasonable people use the market as a glorified lottery ticket. All of these people are missing the point. The only people that could ever meaningfully participate in the market are those for whom 6-10% returns on their income vs. 2-3% are meaningful. Everyone else needs a larger return, the stock market cannot and never will offer the kind of return on investment that a job or business can offer. Stock markets encourage liquidity of capital. They are instruments by which hungrier, but still large investors can take money from their more well-heeled contemporaries without having to resort to ugly political action. There are only two financial investments that really make sense from a personal point of view, mortgage loans and retirement. Mortgages make sense because it's an accessible form of leverage, take the leverage out of the picture and everyone would rent. Retirement makes sense because it's the only other scale people operate at where single percentage point differences in return make a real difference. Otherwise we'd just put all our retirement funds in a savings account. I'd say you need a few million in the bank before financial investment starts to look better than hunting for business deals. Sure, financial investment is less risky, but savvy players can de-risk by studying the market.

ejanus 10y ago
This is great.... Thanks. I figured it out last month while comparing my business returns against stock .

Godel_unicode 10y ago

I wonder if you realize that the market return people are trying to beat is effectively the average return over some period, and therefore you're saying that on average people don't get above average returns? Also, as others have said on this thread, using compounding it would be possible to do extremely well without beating the market.

cmdkeen 10y ago

You would be very, very surprised how few people are trying to pick stocks that they will hold for years and want to beat the market. Despite that being the generally agreed point of "investing" over speculating. I'm including active investors as well as individuals in this, short termism is very prevalent, partly because people chase the fund that outperformed over the last X months. There is a small extent to which the drawbridge does get pulled up. Successful funds can close themselves to new business simply because they have too much money / clients for either their investment or client relations capacity. If a fund owns 4.9% several of its key investments then you can't admit new money without altering the balance of the fund and thus affecting the existing investors.

roystonvassey 10y ago

Just to address a few comments, I meant it's hard to beat the market i.e. have your investments grow faster than the benchmark index. That's a different matter than 'growing rich' or 'doing well'. Sure, you can and in fact, after burning my fingers, all my investments are in index funds too. But, my point referred to the original comment that the system isn't rigged. There's a high probability it is and because of how capital and information flows work, there's a select few who will benefit instead of a wider majority.