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That’s a good thing. A stock market crash wouldn’t improve the economic situation... Many Americans have retirement and pensions tied to stocks.

pydry 6y ago
The stock market is largely (as a %) owned by the wealthy (top 5%).
- cultus 6y ago
  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.
- bhupy 6y ago
  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.
  - throwaway_USD 6y ago
    >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.
    - bhupy 6y ago
      > But its negligible ownership stake 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.
  - pydry 6y ago
    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.
    - bhupy 6y ago
      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.
- tonyedgecombe 6y ago
  I can't find a recent figure however I did find "In 2011, U.S. pensions directed an average of 44 percent of overall capital to the stock market". https://finance.zacks.com/effects-stock-market-pension-funds-4759.html https://finance.zacks.com/effects-stock-market-pension-funds...
  - pydry 6y ago
    What % of overall wealth is that? AFAIK most Americans do not have a lot in their pension pot and many don't have anything at all.
throwaway_USD 6y ago
>A stock market crash wouldn’t improve the economic situation... Many Americans have retirement and pensions tied to stocks. Sounds like a free market isn't good for the Free Market. A crashed stock market would create opportunity for new investors to invest during this historic downturn...instead during this historic downturn the market is being artificially supported (at record high prices nonetheless) so no new investors will enter. Free market economics asides, I could imagine the bourgeois and bourgeoise running around during the French Revolution telling the plebs how revolutions and guillotines aren't good for the economy.
- chasd00 6y ago
  fair point, I remember during the financial crisis in 2009 how i felt the bank bailout was unfair and the market should have been allowed to sort it out. Since then i've come to believe that lives are tied to market prices so it's more complicated. You can let it crash and create opportunity for new investor, you can also watch someone drown and create a new spot at the pool. ...it gets complicated.

pydry 6y ago

The stock market is largely (as a %) owned by the wealthy (top 5%).

cultus 6y ago
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.
bhupy 6y ago
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.
- throwaway_USD 6y ago
  >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.
  - bhupy 6y ago
    > But its negligible ownership stake 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.
- pydry 6y ago
  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.
  - bhupy 6y ago
    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.
tonyedgecombe 6y ago
I can't find a recent figure however I did find "In 2011, U.S. pensions directed an average of 44 percent of overall capital to the stock market". https://finance.zacks.com/effects-stock-market-pension-funds-4759.html https://finance.zacks.com/effects-stock-market-pension-funds...
- pydry 6y ago
  What % of overall wealth is that? AFAIK most Americans do not have a lot in their pension pot and many don't have anything at all.

throwaway_USD 6y ago

>A stock market crash wouldn’t improve the economic situation... Many Americans have retirement and pensions tied to stocks. Sounds like a free market isn't good for the Free Market. A crashed stock market would create opportunity for new investors to invest during this historic downturn...instead during this historic downturn the market is being artificially supported (at record high prices nonetheless) so no new investors will enter. Free market economics asides, I could imagine the bourgeois and bourgeoise running around during the French Revolution telling the plebs how revolutions and guillotines aren't good for the economy.

chasd00 6y ago
fair point, I remember during the financial crisis in 2009 how i felt the bank bailout was unfair and the market should have been allowed to sort it out. Since then i've come to believe that lives are tied to market prices so it's more complicated. You can let it crash and create opportunity for new investor, you can also watch someone drown and create a new spot at the pool. ...it gets complicated.