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Stocks Up $1T Since October
- treelovinhippie 7y agoReminder that 84% of US stocks are owned by the richest 10%: https://boingboing.net/2018/12/02/stock-bubbles-r-us.html https://boingboing.net/2018/12/02/stock-bubbles-r-us.html News like this is a horrific display of wealth inequality, rent-seeking and late stage capitalism. Suffering of the many, for the benefit of the few.
- treelovinhippie 7y agoAh yes, downvotes. HN shows its true sociopathy.
- WalterBright 7y agoAny adult in America can buy stock and participate. At Robinhood.com, you can buy fractional shares for as little as $1 and no commission on the trade. No, I'm not a robinhood user nor do I own stock in robinhood. It's just an example of how it is never been easier for any American to invest in stocks.
- jjeaff 7y agoJust spitballing here, but I'm thinking the bottom 90% doesn't own much stock due to lack of funds. Not because they don't know how or because transaction fees are too high.
- WalterBright 7y agoYou can start investing in stocks for as little as $1. Lack of funds is not the problem.
- nitrogen 7y agoIf I only have $2, why would I put $1 in stocks when I could put all $2 in food?
- WalterBright 7y agoYou can always find an excuse to not invest.
- nitrogen 7y agoI'm saying that when you are on the edge of being able to feed yourself, investing in anything other than being able to eat is the wrong call. I have actually been in that position. It also seems kind of silly to play with $1 in the stock market; I'm going to make like 8 cents in a year on average with a high variance, while if I bought food I would be able to work using those calories and maybe earn $8 in the time it took to burn those calories.
- xyzzyz 7y agoAh, the bottom 90% of Americans, ever on the edge of being able to feed themselves.
- manigandham 7y agoIt's pretty clear that we're discussing the far greater majority that actually can feed themselves and have money left over to invest. Also people go through different stages in life, as you claimed in your comment. You might have been too poor before but I assume you can invest now right?
- WalterBright 7y agoMy iphone is 4 years old now. I've saved a ton of money not buying the latest every year, money I invest.
- WalterBright 7y ago
- ThrowawayR2 7y ago"The poorest third of households buy half of all lotto tickets, according to a Duke University study in the 1980s, in part because lotteries are advertised most aggressively in poorer neighborhoods." https://www.theatlantic.com/business/archive/2015/05/lotteries-americas-70-billion-shame/392870/ https://www.theatlantic.com/business/archive/2015/05/lotteri... [EDIT] It's not an insignificant amount either: half of $70 billion. From the same article: "According to the North American Association of State and Provincial Lotteries, lotteries took in $70.1 billion in sales in the 2014 fiscal year. That’s more than Americans in all 50 states spent on sports tickets, books, video games, movie tickets, and recorded music sales."
- throwaway2048 7y agoI bet they have televisions too, the sheer audacity
- manigandham 7y agoWhat? The point is that lack of funds for investing is clearly not the problem if they're buying so many lotto tickets.
- throwaway2048 7y agoAnd they have televisions too, other money they spend that they could have spent on investing.
- manigandham 7y agoTrue. Nobody said they had to give up TVs though.
- robjan 7y agoWhat is the volume on lotto tickets vs the stock market. Are you really telling me that someone who spends $2 per week (or whatever your lotto price is) on lotto tickets could afford to create a balanced stock portfolio or even buy one stock? Buy ETFs? The buy in price for SPY is US$329. By the time you saved up enough $2/week to buy one unit of that stock it's already too expensive.
- xyzzyz 7y agoPeople making $180k a year lack funds to buy stocks? Yeah, that’s a no from me.
- throwawayjava 7y ago>> I'm thinking the bottom 90% doesn't own much stock due to lack of funds. Not because they don't know how or because transaction fees are too high. > People making $180k a year lack funds to buy stocks? Yeah, that’s a no from me. An individual person making $180K a year is in the 92nd percentile. Parent is talking about the other roughly 300 million people.
- loeg 7y agoGP is talking about the 90th percentile. If you want to quibble about exactly where that line is, whatever, but it's not the point. It's very clear that the percentage of people who can afford to invest is broader than the top decile.
- rapind 7y agoSo the logistics of obtaining stock have been solved. That seems like a great and necessary step in the right direction. "84% of US stocks are owned by the richest 10%" sounds like it could turn into a really big problem though. What can we do next? Why isn't everyone participating?
- loeg 7y agoIt could be a problem, or not. E.g., 16% of a 5x bigger pie is worth more than 30% of a smaller pie. The quote does not state that not everyone is participating (though it's true). Just that the least wealthy 90% own 16% of the (huge) US stock market.
- aries1980 7y agoBecause that number is about public companies. Many people run their own business, which might be not public, but they own "shares". Most Western countries have a wealth of prosperous SMEs. People who invest in someone else's company very likely do so because have no better option, e.g. to invest in her own company for growth. Btw please define "US stock". US tax resident? Listed on US the stock exchange? Owned solely by US citizens?
- drewblaisdell 7y agoYou are being downvoted but I think this point is important: increasing stock prices disproportionately benefit the wealthy and widen the gap between rich and poor. edit: and now I am being downvoted for merely pointing this out.
- WalterBright 7y agoMuch of the wealthy got that way by investing in stocks to begin with. If you don't invest in stocks, you won't benefit from a rising market. Why not do the obvious, and start investing yourself? Don't invest in lottery tickets, which are mathematically a losing game.
- shard972 7y agoMost wealthy people today didn't amass their fortunes through playing the stock market.
- coliveira 7y agoNonsense, the stock market can (sometimes) help on retirement, but apart from professional traders, I haven't seen anyone who got rich simply by investing in stocks, and I know a lot of people who make good money. This is a myth propagated by the Wall Street.
- chii 7y agothere's empirical evidence that by using a broad, well diversified index fund, and consistently remained invested in the market, you can get an average return of about 6-7% per annum over the very long run (30+ yrs). The problem is only when you don't have enough "spare" wealth to invest because the daily costs have all eaten up your paycheck. That's a problem i dont know how to solve.
- coliveira 7y agoThere is empirical evidence that people only come up with this "average" on periods when the market is at the top. If you did your calculations around 2008 you would see a very different picture. It is easy to be bullish on the market when everything seems to be doing well; a wise person needs to look at different periods, and see that the stock market also has produced a lot of disasters. People who lack this perspective are bound to be engulfed by such disasters. Heck, I hear that even professional investors, who are paid to buy stocks, are starting to take their money out of the market fearing of what might come next.
- ducttape12 7y agoMy 401k is invested in that same stock market, along with the retirement accounts of every other person in the United States. I hope the market continues to rise, especially since my parents will be retiring soon.
- fahrradflucht 7y agoWhy does this stand in conflict with acknowledging the fact that massive gains for stock prices (or property for that matter) caused by things like QE and alike, have massive social consequences since the ones that were already wealthy profit a lot more than the average Joes's 401k? You can be a happy investor and still think about the dangers of rising inequality fueled by the market, no?
- deleted 7y ago[deleted]
- ducttape12 7y agoIt doesn't. The wording of the post I replied to was an angry, black and white response condemning a rising stock market since it benefits the wealthy. My point was the stock market affects everyone, not just the super rich. I wouldn't wish for the stock market to crash so some rich guy suffers. The rich will stay rich, it's the middle and low class who would suffer the most. If the market falls 75% tomorrow, Bezos will be fine, my parents will not.
- ipsum2 7y agoHow many Americans have a 401k, retirement accounts, or pension funds? I'm having trouble finding concrete numbers, but it seems to be around 40-60% averaging the sources I came across. In addition, most people reading Hacker News probably work at large public tech companies and own stock in them, so this news is relevant to them.
- ekianjo 7y ago84% in value? or in denominations?
- loeg 7y agoHere's the more sciency source for that claim (several links later): https://www.nber.org/papers/w24085 https://www.nber.org/papers/w24085 Here's an excerpt: > The sharp fall in median net worth and the rise in overall wealth inequality over these years are largely traceable to the high leverage of middle class families and the high share of homes in their portfolio. I.e., the middle portion (affluent or frugal enough to save, but not so extremely wealthy as to be set for life) largely invested in real estate in preference to the stock market, and the real estate market tanked.
- WalterBright 7y agoI can confirm my father's experience that real estate stinks as an investment: 1. maintenance costs 2. insurance costs 3. heavy and ever-increasing property taxes 4. 6% real estate commissions when you sell (contrast that with stock broker commissions on a trade) 5. you never have a clear idea what it is worth 6. it can take months to sell, meaning your money is not available to invest elsewhere The only good thing about it is it's usually the cheapest way to borrow money.
- dgrove 7y ago"Stocks only go up"
- pacyu 7y ago>who is buying these stocks? It’s not individuals. It’s not even pension funds. It’s not the private sector. Almost all the stock purchases are being bought back by corporations in share buyback programs. In other words, companies are buying their own stocks in order to push up the price stocks keep going up while only a minority benefits and not much is returned into actual growth http://michael-hudson.com/2017/08/stock-on-trumponomics/ http://michael-hudson.com/2017/08/stock-on-trumponomics/
- lixtra 7y ago>> The Federal Reserve says it’s going to raise interest rates. Same thing with the European Central Bank and the Bank of England. I wouldn’t consider the text very accurate in hindsight.
- Thorrez 7y agoDo buybacks actually increase stock price? If a company buys back $1M in stock, that means it has $1M less in its bank account (meaning the company is now worth $1M less), but also $1M less stock is in circulation. Mathematically I would expect the price to stay the same.
- loeg 7y agohttps://www.investopedia.com/ask/answers/042015/why-would-company-buyback-its-own-shares.asp https://www.investopedia.com/ask/answers/042015/why-would-co...
- Thorrez 7y agoHmm, so the reasons given for the price going up seem to be: 1. It signals to investors that the company is confident and low risk. (Research and development is considered high risk.) 2. It makes the company more purely itself, it doesn't have shares backed by cash that drag back its price growth. If people expect future growth this means that growth per share will be higher, so they would start buying now to get some of that future higher growth. (Of course in addition to magnifying growth it also magnifies decline.) An interesting thing is that this article says > Stock buybacks can have a mildly positive effect on the economy overall. Which seems to contradict what that previous article said. This article also says that stock buybacks will cause other companies to do more research and development.
- tempsy 7y agoNever talk about stocks on HN. You will be downvoted by people who missed out on the 10 year bull market and desperately trying to justify their mistake by saying its a rigged scam that is akin to playing roulette at a casino.
- WalterBright 7y agoI've been investing for 40 years. It's the same old story - there's no point in investing now, the market is as high as it will ever go. Fast forward a few years, there's regret one didn't invest, but now the market is as high as it will ever go, so not investing again. Rinse, repeat. A lifetime of missed opportunity.
- lliamander 7y agoSurely a recession would be a good time.
- WalterBright 7y agoOnly in hindsight. It takes extra large intestinal fortitude to invest in a recession. I've generally lacked such guts.
- lliamander 7y agoWhy so? I admit to being a novice in that area, but unless you are worried things are going to get drastically worse (civil war, etc) won't most stocks get better as the economy leaves the recession?
- robjan 7y agoWhen you invest $100 and you see it go to $90, $75, $50, $40 at some point the majority of people will "cut their losses" and sell. It's human nature.
- 7y ago
- nif2ee 7y agoThanks to the Fed and quantitative easing, many entrepreneurs and investors who became super rich thanks to this scheme are now spamming my youtube and twitter homepage about their wisdom in everything in life from artificial intelligence to history just because they think they are geniuses and entitled to teaching the poor souls with mental deficiencies (everyone who isn't worth at least tens of millions of dollars) about everything and anything. It's amazing that once you become super rich, everything you say becomes a wisdom quote unless you're Trump of course.
- deleted 7y ago[deleted]
- tarsinge 7y agoIndeed, I think listening to rich people for wisdom in non-business topics, with the assumption that rich = smart, is quite specific to the US.
- onetimemanytime 7y agoWhen it crashes it will wipe out many more trillions
- blackrock 7y agoSometimes, I think there should be a law on how much money, wealth, assets, equities, and properties that people can have. Say, lock it down at $10 million USD, or to some ratio of the national minimum wage. Once you get that much, then you must tap out. Live the rest of your life in the sunset, but you can no longer accrue any more money or wealth. And if you want to accrue more, then you must be in some non-profit business where your mission is to spread the wealth, and to create a better society for all. Then, your maximum level can be bumped up to $100 million (or to some higher ratio of the national minimum wage). This concept of unbridled and unbounded capitalism has severely gone too far. The rich and the wealthy are seriously misbehaving, and they need to self-regulate and reign in their excesses, before the public gets fed up with their misbehavior, and vote in politicians that will force a policy change on them. LOL. I say that, and I laugh, because we all know that the politicians are just the fox guarding the hen house, and they’ll never let this happen. As John McCain said, the people are waging class warfare on the rich. The thing he forgot to mention, is that the rich are slaughtering the rest of us.
- mbar84 7y agoWhat do you think of Warren Buffet, Bill Gates or Elon Musk? It seems to me, that relative to their wealth they spend a negligible amount on themselves. I don't see them filling garages with luxury cars, building empty palaces, buying frivolous expensive watches etc. In other words, they're not binding up economic resources such that everybody else is materially impoverished. In no way do I see that they are slaughtering us and to the contrary, it seems that they are effectively stewards of the wealth that they have accrued. I don't think it's a horrible system for those that have proven themselves in the past to be good stewards, to continue to be allowed to do so. Even if I'm wrong about my judgement of any individual or even if these people are not representative, could you think about modifying your position to at least focus on the principle I'm trying to get at: A billionaire who lives like a pauper, should not be treated the same as one who lives like a spoiled prince. You could for example advocate for luxury consumption taxes on mansions, yachts, cars, jewelry etc. rather than taxes on capital.
- wcoenen 7y agoI only got interested in investing at the start of 2018, and I was very nervous at the time about getting into a bull market that had been going so long. But at the same time, I was also nervous about inflation and not putting money to work. So I went for an all-weather portfolio. This has allowed me to sleep well at night while staying invested (and even adding to my investments).