7 ms·

Except, of course, as people are finally starting to notice and point out, high stocks only benefit the top 10% of society, and are a useless indicator for the

Except, of course, as people are finally starting to notice and point out, high stocks only benefit the top 10% of society, and are a useless indicator for the vast majority, who have little to no holdings.

rusttoxic 7y ago
Ummm what are pension funds?
- jayd16 7y ago
  Indeed, "what are pension funds"? I don't have a pension. No one I know personally has a pensions. The younger or non-tech people I know have little to none in their 401k.
  - dman 7y ago
    No one in tech has a pension.
    - ghaff 7y ago
      That is mostly true but not categorically so. I'm in tech and have one, albeit from an older company that's no longer around.
    - gspr 7y ago
      ITT: Americans, Americans everywhere.
    - NotSammyHagar 7y ago
      Some people I know who are programmers for a defense department company have pensions, 401ks, and bonuses.
  - animalgonzales 7y ago
    this
  - coldpie 7y ago
    I entered the workforce about 10 years ago and I genuinely don't even know what a pension is. I know what a retirement plan is, and employer matching. I guess a pension is something different from that.
    - ghaff 7y ago
      When people say "pension" at least in the US they usually mean a defined benefit retirement plan, i.e. you get $X/month based on salary and years of service starting at age Y. By contrast, a 401(K) is a defined contribution plan. You put however much money in, maybe get matching, and you can take money out after a certain age based on how much you put in and how much it grew. Defined benefit used to be a lot more common but it's become less so for a variety of reasons including tax law changes. Today you see them mostly in government jobs like teachers.
    - gknoy 7y ago
      A pension is a plan where your employer promises to pay you money _after you retire_, in perpetuity. In the "olden days", or when working for the government, one often would work at the same employer for 20+ years, and a pension is a way for that employer to support you. (My dad has multiple pensions from when he worked at a large company, and then later for the local county government.) In general, it scales up the longer you worked for a company. This was back when companies and employees were "loyal" to one another. That seems to be a lot less common now. https://www.investopedia.com/ask/answers/100314/whats-difference-between-401k-and-pension-plan.asp https://www.investopedia.com/ask/answers/100314/whats-differ...
  - Domenic_S 7y ago
    Don't know any state or federal workers? Traditional pensions are still offered by about 84% of state and local governments. That's cops, teachers, etc.
    - jayd16 7y ago
      I know a teacher but she still has a few years before she'll be eligible.
      - ghaff 7y ago
        Which is one of the reasons that pensions fell out of favor for employment in the private sector. They were traditionally very oriented towards long-term (a decade or more) employment with a single company. With typical employment in a lot of sectors--certainly including tech--a large majority of workers would basically end up getting little or nothing out of a traditional pension.
    - 12xo 7y ago
      FYI - California teachers do not pay into SocialSecurity. Their pension is 100% on the backs of the tax payers of CA. Market performance is irrelevant as their pensions are paid regardless of performance.
      - Domenic_S 7y ago
        Market performance is only irrelevant as far as the amount the retirees see on their checks -- it's relevant to CA taxpayers because the money has to come from somewhere if the market underperforms.
        12xo 7y ago
        Yes, that was my point. The market investments are not what is driving the pension's long term value. The underwriting by the state is what makes it valuable. The markets are simply an avenue for growth, or as was the case in the past, losses...
  - 12xo 7y ago
    Worse, many of those with pensions find themselves one day without one... Look at the hundreds of bankrupt orgs that have somehow, been able to simply walk away from their obligations. The only people who hold pensions these days are govt workers. People who do not contribute to the economy.
- sneakernets 7y ago
  Pensions as we know them won't exist in five to ten years.
  - drcross 7y ago
    Could you elaborate please? Genuinely interested to hear your take.
    - sneakernets 7y ago
      No unions and privatizing government jobs = no pensions.
  - DataAF 7y ago
    Those of us under 30 never knew them either.
    - sneakernets 7y ago
      And most never will. The ones left are awful and full of restrictions, and can be taken away at any time for any reason, even if it's illegal in your state.
- departure 7y ago
  Less than 13% of US private sector workers participate in pensions plans[0]. [0]https://www.pensionrights.org/publications/statistic/how-many-american-workers-participate-workplace-retirement-plans https://www.pensionrights.org/publications/statistic/how-man...
  - Domenic_S 7y ago
    Nearly 22 million people work for the state, federal, and local governments, nearly 20% of the active workforce. https://www.bls.gov/oes/current/999001.htm https://www.bls.gov/oes/current/999001.htm
    - tomtheelder 7y ago
      Okay so adding those numbers with the private sector ones you still get that the vast majority of American's aren't benefiting.
      - Domenic_S 7y ago
        I don't know if I'd characterize 66% of Americans (100% - (public + private)) the "vast majority"...
      - ericd 7y ago
        You’re also forgetting all the people without pensions, but with IRAs and/or 401ks. And then the many more with brokerage accounts. And young people seem to have jumped headlong into Robinhood.
  - 2zcon 7y ago
    You're not including the defined contribution retirement plans, which are a vehicle for investment. N.B. I believe 'pension' ≡ 'defined benefit' is an American English thing, which may the source of the confusion. I, my employer, and my provider refer to my private, defined-contribution plan as a pension.
    - sneakernets 7y ago
deleted 7y ago
[deleted]
Turing_Machine 7y ago
> high stocks only benefit the top 10% of society, and are a useless indicator for the vast majority, who have little to no holdings. This is absolutely not true. Most pension plans are at least partially invested in stocks.
- deleted 7y ago
  [deleted]
- robohoe 7y ago
  Agreed. In addition to pension plans (most government employees), all 401K plans invest into stocks/indices. That's a huge chunk of regular middle class people throwing money into the market. Just because some people don't actively day trade, it doesn't mean that they're not affected by stock market.
  - abakker 7y ago
    Also, increasing stock prices are usually a key component of corporate finance, which will yield job growth, or promotion, or investment inside the firm, which are all good for employees. Even if much of the wealth generated directly by stock increases happens for the owners of the company, it enables the company to operate.
- mcarthur_gill 7y ago
  As of 2016, according to NASRA, pension funds on average had 48% of their holdings in stocks. And the pension market is ~140% of GDP. So that's a lot of cash in stocks. Too much if you ask me, but I'm just an engineer.
- grecy 7y ago
  And what percentage of the poorest 50% of Americans have even $5,000 in any kind of retirement savings?
  - ChrisLomont 7y ago
    And what percentage of those people are not bottom 50% by the time they retire? Wealth is not a lifetime static number. It's easy to google median wealth by age and see how people add wealth over a lifetime.
css 7y ago
The largest stockholding entity in the state of California is CalSTRS (California State Teachers' Retirement System); the holdings[0] represent the 11th largest retirement fund in the world[1]. [1] https://www.calstrs.com/investments-overview https://www.calstrs.com/investments-overview [0] https://www.pionline.com/article/20170904/INTERACTIVE/170839963/the-p-i-willis-towers-watson-300-world-s-largest-retirement-funds https://www.pionline.com/article/20170904/INTERACTIVE/170839...
frockington1 7y ago
And any workers who plan on retiring
kccqzy 7y ago
Definitely no. The popularity of 401k plans and as such makes the fortunes of many middle class Americans directly tied to gyrations of Wall Street.
- auiya 7y ago
  More than one-third of Americans who work full-time have no access to pensions or retirement accounts such as 401(k)s that derive their value from financial assets like stocks and bonds. The percentage of workers covered by generous defined-benefit pension plans has declined from 62% in 1983 to 17% by 2016. While some economists consider an increase in the stock market to have a "wealth effect" that increases economic growth, economists like Former Dallas Federal Reserve Bank President Richard Fisher believe those effects are limited. Make no mistake the stock market only benefits the upper class, and quite disproportionately so. https://www.nytimes.com/2018/01/22/opinion/bull-stock-market.html https://www.nytimes.com/2018/01/22/opinion/bull-stock-market...
- brewdad 7y ago
  The median 401k balance for 40-49 year olds is $36,000 [0]. These are adults who, for the most part, have never had access to pensions, only to 401k plans. They are about midway between entering the workforce and retirement. They, as a group, are nowhere near prepared to retire. Ever. A booming stock market is irrelevant to most Americans. [0]: https://www.nerdwallet.com/article/investing/the-average-401k-balance-by-age https://www.nerdwallet.com/article/investing/the-average-401...
  - kevstev 7y ago
    This gets thrown around a bunch in personal finance forums as well, but its a bit dishonest IMHO- it saying that the avg balance for a 401k account is 36k, not that the average balance across all 401ks account for an individual is 36k. Considering the typical tenure these days is around 2-3 years, this makes sense. Most people it seems don't really consolidate their 401ks. That article also says that the average isn't a useful measure, but I feel it likely is more useful than stated as everyone has a capped contribution amount. There are some outlying scenarios where you can contribute more, but those are far from typical. It seems there are a bunch of ways to fudge these numbers- I have a roth and a standard 401k- these are likely counted as 2 separate accounts, thus painting a much bleaker picture of my overall financial health.
briandear 7y ago
That 10% number has certainly been making the rounds, almost like a talking point. However, that’s literal nonsense. > People are finally starting to notice and point out. Incorrectly. Every person in America with a pension or a retirement account has significant exposure to the stock market. Universities and their endowments, which make institutionally awarded need based financial aid possible directly benefit from the stock market. Casualty (and other) insurance companies directly benefit from the stock market which affects their profitability and thus their ability to write policies at reasonable rates; it also affects the reinsurance market which can mean the difference between a large housing development being built or not, or a new industrial plant opening or not. This “only benefits the top 10%” talking point is so ridiculous as to not be worthy of comment, but since it keeps popping up from people who have a political interest in talking down the economy, it should be addressed before more people actually start to believe that tripe. The origin of that “10%” number was from a CNBC report that said “the richest 10% own 85% of individually traded stocks.” However that statistic conveniently excludes mutual funds — which generally consist of a basket of individually traded stocks packaged together. So if I own $1 million in a Fidelity mutual fund, I am not considered as owning “individually traded stocks.” So, to use that “only benefits the top 10%” number, then that would say that the stock market doesn’t benefit me because I only own shares in a mutual fund. Which is complete baloney. When Trump calls out fake news, this is exactly the kind of thing he’s referring to: a statement that a rising market only benefits the top 10% because they own 85% of individually traded stocks — while that is completely false because everyone that owns shares of a mutual fund (the majority of American families in fact,) doesn’t benefit. And your statement “the vast majority” don’t own stocks, that’s also a lie, according to Gallup: https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own... Even if Gallup was off by 10%, which would be a huge margin or error, that’s still nowhere close to a “vast” majority. Now to be fair, you did stick in a qualifier there “little” but that is meaningless. How much is “little?” And how do you know how prevalent “little” vs. “none” is? It’s just a meaningless distraction to protect against the fact that the majority of Americans own stock and even those that don’t own stock benefit from a good economy. Very low unemployment means tighter labor market which means wage competition. It would seem that the economy could be absolutely perfect but those of different political stripes would be wishing its downfall just to win an election. Didn’t Bill Maher or one of those hosts actually wish for a recession so it would make it easier to beat Trump? Some sick people that would wish for people to lose their jobs and homes in order to beat Republicans. We can have honest policy debates. But let’s not trade in misrepresentations to win political points.
skrowl 7y ago
You can't REALLY believe that only the top 10% of wage earners in the United States own stocks, right? Please tell me you're just parroting something you heard and you don't actually think that.
- auiya 7y ago
  A once-every-three-years study by the Federal Reserve Board found that in 2016, 51.9 percent of families owned stocks, either directly or as part of a fund. https://www.federalreserve.gov/publications/files/scf17.pdf https://www.federalreserve.gov/publications/files/scf17.pdf
tathougies 7y ago
60 percent of Americans have their fortunes tied to the market via direct investment or retirement funds. The government also finances a lot of its pensions via the market.

rusttoxic 7y ago

Ummm what are pension funds?

jayd16 7y ago
Indeed, "what are pension funds"? I don't have a pension. No one I know personally has a pensions. The younger or non-tech people I know have little to none in their 401k.
- dman 7y ago
  No one in tech has a pension.
  - ghaff 7y ago
    That is mostly true but not categorically so. I'm in tech and have one, albeit from an older company that's no longer around.
  - gspr 7y ago
    ITT: Americans, Americans everywhere.
  - NotSammyHagar 7y ago
    Some people I know who are programmers for a defense department company have pensions, 401ks, and bonuses.
- animalgonzales 7y ago
  this
- coldpie 7y ago
  I entered the workforce about 10 years ago and I genuinely don't even know what a pension is. I know what a retirement plan is, and employer matching. I guess a pension is something different from that.
  - ghaff 7y ago
    When people say "pension" at least in the US they usually mean a defined benefit retirement plan, i.e. you get $X/month based on salary and years of service starting at age Y. By contrast, a 401(K) is a defined contribution plan. You put however much money in, maybe get matching, and you can take money out after a certain age based on how much you put in and how much it grew. Defined benefit used to be a lot more common but it's become less so for a variety of reasons including tax law changes. Today you see them mostly in government jobs like teachers.
  - gknoy 7y ago
    A pension is a plan where your employer promises to pay you money _after you retire_, in perpetuity. In the "olden days", or when working for the government, one often would work at the same employer for 20+ years, and a pension is a way for that employer to support you. (My dad has multiple pensions from when he worked at a large company, and then later for the local county government.) In general, it scales up the longer you worked for a company. This was back when companies and employees were "loyal" to one another. That seems to be a lot less common now. https://www.investopedia.com/ask/answers/100314/whats-difference-between-401k-and-pension-plan.asp https://www.investopedia.com/ask/answers/100314/whats-differ...
- Domenic_S 7y ago
  Don't know any state or federal workers? Traditional pensions are still offered by about 84% of state and local governments. That's cops, teachers, etc.
  - jayd16 7y ago
    I know a teacher but she still has a few years before she'll be eligible.
    - ghaff 7y ago
      Which is one of the reasons that pensions fell out of favor for employment in the private sector. They were traditionally very oriented towards long-term (a decade or more) employment with a single company. With typical employment in a lot of sectors--certainly including tech--a large majority of workers would basically end up getting little or nothing out of a traditional pension.
  - 12xo 7y ago
    FYI - California teachers do not pay into SocialSecurity. Their pension is 100% on the backs of the tax payers of CA. Market performance is irrelevant as their pensions are paid regardless of performance.
    - Domenic_S 7y ago
      Market performance is only irrelevant as far as the amount the retirees see on their checks -- it's relevant to CA taxpayers because the money has to come from somewhere if the market underperforms.
      - 12xo 7y ago
        Yes, that was my point. The market investments are not what is driving the pension's long term value. The underwriting by the state is what makes it valuable. The markets are simply an avenue for growth, or as was the case in the past, losses...
- 12xo 7y ago
  Worse, many of those with pensions find themselves one day without one... Look at the hundreds of bankrupt orgs that have somehow, been able to simply walk away from their obligations. The only people who hold pensions these days are govt workers. People who do not contribute to the economy.
sneakernets 7y ago
Pensions as we know them won't exist in five to ten years.
- drcross 7y ago
  Could you elaborate please? Genuinely interested to hear your take.
  - sneakernets 7y ago
    No unions and privatizing government jobs = no pensions.
- DataAF 7y ago
  Those of us under 30 never knew them either.
  - sneakernets 7y ago
    And most never will. The ones left are awful and full of restrictions, and can be taken away at any time for any reason, even if it's illegal in your state.
departure 7y ago
Less than 13% of US private sector workers participate in pensions plans[0]. [0]https://www.pensionrights.org/publications/statistic/how-many-american-workers-participate-workplace-retirement-plans https://www.pensionrights.org/publications/statistic/how-man...
- Domenic_S 7y ago
  Nearly 22 million people work for the state, federal, and local governments, nearly 20% of the active workforce. https://www.bls.gov/oes/current/999001.htm https://www.bls.gov/oes/current/999001.htm
  - tomtheelder 7y ago
    Okay so adding those numbers with the private sector ones you still get that the vast majority of American's aren't benefiting.
    - Domenic_S 7y ago
      I don't know if I'd characterize 66% of Americans (100% - (public + private)) the "vast majority"...
    - ericd 7y ago
      You’re also forgetting all the people without pensions, but with IRAs and/or 401ks. And then the many more with brokerage accounts. And young people seem to have jumped headlong into Robinhood.
- 2zcon 7y ago
  You're not including the defined contribution retirement plans, which are a vehicle for investment. N.B. I believe 'pension' ≡ 'defined benefit' is an American English thing, which may the source of the confusion. I, my employer, and my provider refer to my private, defined-contribution plan as a pension.
  - sneakernets 7y ago

deleted 7y ago

[deleted]

Turing_Machine 7y ago

> high stocks only benefit the top 10% of society, and are a useless indicator for the vast majority, who have little to no holdings. This is absolutely not true. Most pension plans are at least partially invested in stocks.

deleted 7y ago
[deleted]
robohoe 7y ago
Agreed. In addition to pension plans (most government employees), all 401K plans invest into stocks/indices. That's a huge chunk of regular middle class people throwing money into the market. Just because some people don't actively day trade, it doesn't mean that they're not affected by stock market.
- abakker 7y ago
  Also, increasing stock prices are usually a key component of corporate finance, which will yield job growth, or promotion, or investment inside the firm, which are all good for employees. Even if much of the wealth generated directly by stock increases happens for the owners of the company, it enables the company to operate.
mcarthur_gill 7y ago
As of 2016, according to NASRA, pension funds on average had 48% of their holdings in stocks. And the pension market is ~140% of GDP. So that's a lot of cash in stocks. Too much if you ask me, but I'm just an engineer.
grecy 7y ago
And what percentage of the poorest 50% of Americans have even $5,000 in any kind of retirement savings?
- ChrisLomont 7y ago
  And what percentage of those people are not bottom 50% by the time they retire? Wealth is not a lifetime static number. It's easy to google median wealth by age and see how people add wealth over a lifetime.

css 7y ago

The largest stockholding entity in the state of California is CalSTRS (California State Teachers' Retirement System); the holdings[0] represent the 11th largest retirement fund in the world[1]. [1] https://www.calstrs.com/investments-overview https://www.calstrs.com/investments-overview [0] https://www.pionline.com/article/20170904/INTERACTIVE/170839963/the-p-i-willis-towers-watson-300-world-s-largest-retirement-funds https://www.pionline.com/article/20170904/INTERACTIVE/170839...

frockington1 7y ago

And any workers who plan on retiring

kccqzy 7y ago

Definitely no. The popularity of 401k plans and as such makes the fortunes of many middle class Americans directly tied to gyrations of Wall Street.

auiya 7y ago
More than one-third of Americans who work full-time have no access to pensions or retirement accounts such as 401(k)s that derive their value from financial assets like stocks and bonds. The percentage of workers covered by generous defined-benefit pension plans has declined from 62% in 1983 to 17% by 2016. While some economists consider an increase in the stock market to have a "wealth effect" that increases economic growth, economists like Former Dallas Federal Reserve Bank President Richard Fisher believe those effects are limited. Make no mistake the stock market only benefits the upper class, and quite disproportionately so. https://www.nytimes.com/2018/01/22/opinion/bull-stock-market.html https://www.nytimes.com/2018/01/22/opinion/bull-stock-market...
brewdad 7y ago
The median 401k balance for 40-49 year olds is $36,000 [0]. These are adults who, for the most part, have never had access to pensions, only to 401k plans. They are about midway between entering the workforce and retirement. They, as a group, are nowhere near prepared to retire. Ever. A booming stock market is irrelevant to most Americans. [0]: https://www.nerdwallet.com/article/investing/the-average-401k-balance-by-age https://www.nerdwallet.com/article/investing/the-average-401...
- kevstev 7y ago
  This gets thrown around a bunch in personal finance forums as well, but its a bit dishonest IMHO- it saying that the avg balance for a 401k account is 36k, not that the average balance across all 401ks account for an individual is 36k. Considering the typical tenure these days is around 2-3 years, this makes sense. Most people it seems don't really consolidate their 401ks. That article also says that the average isn't a useful measure, but I feel it likely is more useful than stated as everyone has a capped contribution amount. There are some outlying scenarios where you can contribute more, but those are far from typical. It seems there are a bunch of ways to fudge these numbers- I have a roth and a standard 401k- these are likely counted as 2 separate accounts, thus painting a much bleaker picture of my overall financial health.

briandear 7y ago

That 10% number has certainly been making the rounds, almost like a talking point. However, that’s literal nonsense. > People are finally starting to notice and point out. Incorrectly. Every person in America with a pension or a retirement account has significant exposure to the stock market. Universities and their endowments, which make institutionally awarded need based financial aid possible directly benefit from the stock market. Casualty (and other) insurance companies directly benefit from the stock market which affects their profitability and thus their ability to write policies at reasonable rates; it also affects the reinsurance market which can mean the difference between a large housing development being built or not, or a new industrial plant opening or not. This “only benefits the top 10%” talking point is so ridiculous as to not be worthy of comment, but since it keeps popping up from people who have a political interest in talking down the economy, it should be addressed before more people actually start to believe that tripe. The origin of that “10%” number was from a CNBC report that said “the richest 10% own 85% of individually traded stocks.” However that statistic conveniently excludes mutual funds — which generally consist of a basket of individually traded stocks packaged together. So if I own $1 million in a Fidelity mutual fund, I am not considered as owning “individually traded stocks.” So, to use that “only benefits the top 10%” number, then that would say that the stock market doesn’t benefit me because I only own shares in a mutual fund. Which is complete baloney. When Trump calls out fake news, this is exactly the kind of thing he’s referring to: a statement that a rising market only benefits the top 10% because they own 85% of individually traded stocks — while that is completely false because everyone that owns shares of a mutual fund (the majority of American families in fact,) doesn’t benefit. And your statement “the vast majority” don’t own stocks, that’s also a lie, according to Gallup: https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own... Even if Gallup was off by 10%, which would be a huge margin or error, that’s still nowhere close to a “vast” majority. Now to be fair, you did stick in a qualifier there “little” but that is meaningless. How much is “little?” And how do you know how prevalent “little” vs. “none” is? It’s just a meaningless distraction to protect against the fact that the majority of Americans own stock and even those that don’t own stock benefit from a good economy. Very low unemployment means tighter labor market which means wage competition. It would seem that the economy could be absolutely perfect but those of different political stripes would be wishing its downfall just to win an election. Didn’t Bill Maher or one of those hosts actually wish for a recession so it would make it easier to beat Trump? Some sick people that would wish for people to lose their jobs and homes in order to beat Republicans. We can have honest policy debates. But let’s not trade in misrepresentations to win political points.

skrowl 7y ago

You can't REALLY believe that only the top 10% of wage earners in the United States own stocks, right? Please tell me you're just parroting something you heard and you don't actually think that.

auiya 7y ago
A once-every-three-years study by the Federal Reserve Board found that in 2016, 51.9 percent of families owned stocks, either directly or as part of a fund. https://www.federalreserve.gov/publications/files/scf17.pdf https://www.federalreserve.gov/publications/files/scf17.pdf

tathougies 7y ago

60 percent of Americans have their fortunes tied to the market via direct investment or retirement funds. The government also finances a lot of its pensions via the market.