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What about stock market gains for 2019? S&P was up 30% last year which was fantastic. Before y'all reply that the stock market only benefits the wealthy, that's

What about stock market gains for 2019? S&P was up 30% last year which was fantastic. Before y'all reply that the stock market only benefits the wealthy, that's patently false. Weather it's your parents retirement account, pensions, your company stock options, your own trading account, nearly everybody has money in the market and beneifts from gains.

TylerE 7y ago
That only works so long as it doesn't collapse like a house of cards due to being overvalued beyond all justifiable reason. Asserting that the US economy as a whole is worth 50% more than it was 3 years ago is delusional.
- merpnderp 7y ago
  Before calling millions of highly educated people who work in the stock market delusional, might it be worth considering what exactly a 50% increase in the stock market represents, which is a 50% increase in perceived future value of the market? As an example, 3 years ago Starlink was little more than an FCC filing. Now it is poised to create a brand new market conceivably worth as much as Apple.
  - mrfredward 7y ago
    A recession that costs 2% of GDP can drop the stock market 40%. That doesn't make mathematical sense, but it's been happening all through the history of equity markets because there isn't a strong mechanism to fight an irrational change in sentiment. If you think Intel is overvalued compared to AMD, you can short Intel, buy AMD, and make a bundle of money if you are right, so there is a mechanism to keep relative prices in line. If you think the 2020 market is overvalued compared to the 2012 stock market though, you can't move money back in time. Valuation doesn't tell you if/when a crash is gonna happen, it just gives a vague sense that returns will be lower over the next 10-20 years. A small positive return beats nothing, so a rational actor that knows the market is overvalued will stay invested. Hence, there isn't really any reason to believe market valuations are so rational. I tend to think the market is overvalued right now, but I'm buying stocks anyway, because I'm saving money and don't want to stuff it under my mattress.
wyldfire 7y ago
> What about stock market gains for 2019? Can you show a causal relationship? Or would the null-legislation result in the same (or greater) gains? > nearly everybody has money in the market and beneifts from gains. I think this is very much untrue. It is very likely that the bottom ~30% income in the US have no spare earnings to contribute to retirement savings via equities or any other method -- either that or they have no access to an employer-sponsored tax advantaged retirement account like 401k/403b.
- ryandrake 7y ago
  More than that. A full 45% of Americans hold no stock whatsoever, including indirectly through IRAs and 401k [1]. 1: https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...
freehunter 7y ago
The stock market always trends up. The only time it trends down is during recessions, which have always recovered and added gains on top of the losses after the recession ends. It would be incredibly difficult to point to one specific economic policy that was responsible for how many decades of stock market gains.
francisofascii 7y ago
If you are a younger individual in the early stages of retirement savings, this is a bad thing, because you expect to buy a lot more stock in the future. Stocks are now 30% more expensive than one year ago.
- Gibbon1 7y ago
  They say stock prices are up! I say stock prices are inflated.
tclancy 7y ago
It's nice that you have such a great perspective on who "everyone" is. It's self-reported and thus probably well underestimated, but only 55% of Americans say they own stock[0]. And 84% of the total stock belongs to 10% of the people[1]. [0] https://www.financialsamurai.com/what-percent-of-americans-own-stocks/ https://www.financialsamurai.com/what-percent-of-americans-o... [1] https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...
- titzer 7y ago
  I upvoted this comment to counter apparent downvotes, specifically because it is short and cited actual data and had references. Come on, hackernews. We can do better than downvoting informative comments.
- refurb 7y ago
  Looks like “owning stock” in your data doesn’t include thing like pensions (public or private). A lot of people own stock indirectly.
  - tclancy 7y ago
    Agreed, that's why I said it was "probably well underestimated"; but even then if 20% of Americans don't have $500 in savings[0], it feels like "everyone" is at best something between 50-80%. [0] https://www.marketwatch.com/story/half-of-americans-are-just-one-paycheck-away-from-financial-disaster-2019-05-16 https://www.marketwatch.com/story/half-of-americans-are-just...
deleted 7y ago
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mywittyname 7y ago
1) the S&P500 is a measure of expected future growth for a very small percentage of companies out there. The S&P500 has been going up like crazy for years, and the S&P500 started off down quite a bit in early 2019 after taking a 7% loss in 2018. The two year average return is only ~12%pa and the five year average return was about 10%pa. 2) the largest companies in the S&P 500 represent a tiny slice of US GDP. 21% of the S&P 500 are IT companies, as are 4 of the top 5 companies. However, IT represents only 6% of the total US private industry GDP. Thus, the S&P500 does not represent the economy at large. It's the economic equivalent of an opinion poll containing only redheads. 3) Money paid in taxes by such firms in taxes also benefits your parents and everyone else, just in different ways.
ilikehurdles 7y ago
2018 was the worst year in a decade for the S&P, and now it's about where it would have been had average trends from the years before continued. Much of the gains in 2019 have been driven by stock buybacks, the Fed pumping cash into the economy, and lowering interest rates. Companies maybe have more money on the books due to taxes but what are they spending it on (or are they spending it at all)? Seems to be buying back shares more so than R&D, employee benefits, or physical growth. GDP growth is right around 2%, where it was prior to the corporate tax cuts of 2017. My investment accounts look good this year, but they were pretty red at the start of last year.
0xff00ffee 7y ago
"Nearly everybody"? What the ever loving hell are you talking about? 44% of all employed people in the united states earn $18,000 or less. This is a major problem: you live in a bubble and know little about people that don't make as much as you. Half the country is struggling to stay out of POVERTY and you're playing the Marie Antoinette card.
htfu 7y ago
In any case the stock market is just a model. You could make the claim higher valuation more accurately reflects reality, or that it "benefits everyone", or that the higher confidence is indicative of future higher growth. You cannot possibly claim it in itself is actual growth.

TylerE 7y ago

That only works so long as it doesn't collapse like a house of cards due to being overvalued beyond all justifiable reason. Asserting that the US economy as a whole is worth 50% more than it was 3 years ago is delusional.

merpnderp 7y ago
Before calling millions of highly educated people who work in the stock market delusional, might it be worth considering what exactly a 50% increase in the stock market represents, which is a 50% increase in perceived future value of the market? As an example, 3 years ago Starlink was little more than an FCC filing. Now it is poised to create a brand new market conceivably worth as much as Apple.
- mrfredward 7y ago
  A recession that costs 2% of GDP can drop the stock market 40%. That doesn't make mathematical sense, but it's been happening all through the history of equity markets because there isn't a strong mechanism to fight an irrational change in sentiment. If you think Intel is overvalued compared to AMD, you can short Intel, buy AMD, and make a bundle of money if you are right, so there is a mechanism to keep relative prices in line. If you think the 2020 market is overvalued compared to the 2012 stock market though, you can't move money back in time. Valuation doesn't tell you if/when a crash is gonna happen, it just gives a vague sense that returns will be lower over the next 10-20 years. A small positive return beats nothing, so a rational actor that knows the market is overvalued will stay invested. Hence, there isn't really any reason to believe market valuations are so rational. I tend to think the market is overvalued right now, but I'm buying stocks anyway, because I'm saving money and don't want to stuff it under my mattress.

wyldfire 7y ago

> What about stock market gains for 2019? Can you show a causal relationship? Or would the null-legislation result in the same (or greater) gains? > nearly everybody has money in the market and beneifts from gains. I think this is very much untrue. It is very likely that the bottom ~30% income in the US have no spare earnings to contribute to retirement savings via equities or any other method -- either that or they have no access to an employer-sponsored tax advantaged retirement account like 401k/403b.

ryandrake 7y ago
More than that. A full 45% of Americans hold no stock whatsoever, including indirectly through IRAs and 401k [1]. 1: https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...

freehunter 7y ago

The stock market always trends up. The only time it trends down is during recessions, which have always recovered and added gains on top of the losses after the recession ends. It would be incredibly difficult to point to one specific economic policy that was responsible for how many decades of stock market gains.

francisofascii 7y ago

If you are a younger individual in the early stages of retirement savings, this is a bad thing, because you expect to buy a lot more stock in the future. Stocks are now 30% more expensive than one year ago.

Gibbon1 7y ago
They say stock prices are up! I say stock prices are inflated.

tclancy 7y ago

It's nice that you have such a great perspective on who "everyone" is. It's self-reported and thus probably well underestimated, but only 55% of Americans say they own stock[0]. And 84% of the total stock belongs to 10% of the people[1]. [0] https://www.financialsamurai.com/what-percent-of-americans-own-stocks/ https://www.financialsamurai.com/what-percent-of-americans-o... [1] https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

titzer 7y ago
I upvoted this comment to counter apparent downvotes, specifically because it is short and cited actual data and had references. Come on, hackernews. We can do better than downvoting informative comments.
refurb 7y ago
Looks like “owning stock” in your data doesn’t include thing like pensions (public or private). A lot of people own stock indirectly.
- tclancy 7y ago
  Agreed, that's why I said it was "probably well underestimated"; but even then if 20% of Americans don't have $500 in savings[0], it feels like "everyone" is at best something between 50-80%. [0] https://www.marketwatch.com/story/half-of-americans-are-just-one-paycheck-away-from-financial-disaster-2019-05-16 https://www.marketwatch.com/story/half-of-americans-are-just...

deleted 7y ago

[deleted]

mywittyname 7y ago

1) the S&P500 is a measure of expected future growth for a very small percentage of companies out there. The S&P500 has been going up like crazy for years, and the S&P500 started off down quite a bit in early 2019 after taking a 7% loss in 2018. The two year average return is only ~12%pa and the five year average return was about 10%pa. 2) the largest companies in the S&P 500 represent a tiny slice of US GDP. 21% of the S&P 500 are IT companies, as are 4 of the top 5 companies. However, IT represents only 6% of the total US private industry GDP. Thus, the S&P500 does not represent the economy at large. It's the economic equivalent of an opinion poll containing only redheads. 3) Money paid in taxes by such firms in taxes also benefits your parents and everyone else, just in different ways.

ilikehurdles 7y ago

2018 was the worst year in a decade for the S&P, and now it's about where it would have been had average trends from the years before continued. Much of the gains in 2019 have been driven by stock buybacks, the Fed pumping cash into the economy, and lowering interest rates. Companies maybe have more money on the books due to taxes but what are they spending it on (or are they spending it at all)? Seems to be buying back shares more so than R&D, employee benefits, or physical growth. GDP growth is right around 2%, where it was prior to the corporate tax cuts of 2017. My investment accounts look good this year, but they were pretty red at the start of last year.

0xff00ffee 7y ago

"Nearly everybody"? What the ever loving hell are you talking about? 44% of all employed people in the united states earn $18,000 or less. This is a major problem: you live in a bubble and know little about people that don't make as much as you. Half the country is struggling to stay out of POVERTY and you're playing the Marie Antoinette card.

htfu 7y ago

In any case the stock market is just a model. You could make the claim higher valuation more accurately reflects reality, or that it "benefits everyone", or that the higher confidence is indicative of future higher growth. You cannot possibly claim it in itself is actual growth.