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And QQQ rose 47% this year. This does not seem surprising at all. The entire market went up in 2023.
by walexander 3y ago
And QQQ rose 47% this year. This does not seem surprising at all. The entire market went up in 2023.
- thinkingtoilet 3y agoDid the wealth of the poorest people rise proportionally as well? I would bet not. We are an era of extreme wealth inequality and it's clearly horrible for society.
- yieldcrv 3y agono, they didn’t have any savings to begin with and everything they bought depreciates in value it was actually very cumbersome for me to find people that knew anything else, when I was younger everyone I was around only prided themselves in buying depreciating material things. I’m aware of how pervasive that mentality can be, could be considered a distinct culture.
- lacrimacida 3y agoNo, it actually dropped proportionally.
- toenail 3y agoThe inequality is not the problem, it's a symptom of the wealth redistribution from the bottom to the top.
- thfuran 3y agoWhat exactly is the difference?
- toenail 3y agoIf inequality was the problem, redistribution could fix it. If redistribution is the problem, simply doing more redistributing won't fix anything.
- thfuran 3y agoNo amount of redistribution from the bottom to the top will correct inequality.
- simbolit 3y agoSituation 1, Year 1: Rich person has 100, the one hundred poor people have 1. Situation 1, Year 2: Rich person has 150, the one hundred poor people have 1.2 Situation 2, Year 1: Rich person has 100, the one hundred poor people have 1. Situation 2, Year 2: Rich person has 150, the one hundred poor people have 0.8 Both situations show increasing wealth inequality, but only one shows wealth redistribution up the ladder.
- epidemian 3y agoOther dynamics, like inflation and gentrification to name a couple, can make Situation 1 basically the same in practice to Situation 2. It just makes it more difficult to point out because "everyone's money number has gone up, so the system works!"
- simbolit 3y agoI agree, the difference isn't large. But my parent was asking for the difference, and I think that is the difference.
- lucaspm98 3y agoMy wealth rose by 100% last year, as I was saving throughout the year from near zero while matching these returns with low fee ETFs everyone has access to. I personally believe many of these dynasties do have some unfair and systematic advantages, but this article doesn’t have evidence to support that conclusion.
- jzb 3y ago"everyone has access to" If you don't have money to put into an ETF, you don't have access to it. "Just invest your money" is not a helpful response to people who live paycheck to paycheck.
- kwhitefoot 3y agoIs ETF just a new term for a tracking fund?
- creer 3y agoNot new. Used to be tracking funds. Now is any fund that's openly traded during the day as opposed to bought and sold from the fund company.
- hedora 3y agoIn the US, unions had a good year, but 43% pay raises in union contracts were mostly unheard of, so that part of the population probably isn't keeping up. I wouldn't be surprised if wages in the parts of the global population that's currently industrializing (parts of China and India) went up by way more than 43% though. One thing I've realized in recent years (thanks to silicon valley stock options): It's not that hard to get into a >99% income bracket for a year or two. You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years. However, staying in that bracket is much harder; you need to have a windfall every year (so, be a successful VC) or be an executive. For that reason, I'd be interested to see income percentile statistics broken out over a 10 year period vs. annually. Some people summarize this effect with the acronym HENRY (High Earner, Not Rich Yet).
- solardev 3y ago> For that reason, I'd be interested to see income percentile statistics broken out over a 10 year period vs. annually. Some people summarize this effect with the acronym HENRY (High Earner, Not Rich Yet). Heh, most of the world would kill just to experience that for one year in their life.
- mistrial9 3y agoin his gracious majesty, our Lord the King has declared that both rich and poor alike, may sleep under bridges in the rain
- digging 3y ago> You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years. I realize we're on HN, but... calling that not hard feels out of touch. By definition it's extremely rare. I guess if you mean, an individual who's gotten into that rare position doesn't need to struggle particularly hard to see the fruits, the comment makes sense. Is that it?
- manwe150 3y agoIt is only rare in a particular year. If a given person is assumed to only earn that for 1-2 years of a 30+ year career, then 10-20% of all people will be a top 1% earner, by rough math. Still rare, but not nearly as uncommon when looked at that way, if you take the hypothesis that it is commonly a one-time event.
- jvanderbot 3y agoPoorest = no wealth to grow. If you define wealth as "assets" or "investments" which almost certainly makes sense. A wealth growth of 0->1 is infinite %.
- VirusNewbie 3y agoincrease in money supply helps people who are using debt to leverage into assets. Most large companies do this to some extent, and the upper middle class and rich people are heavily invested into equities. People who are not levered into assets are worse off after an increase in money supply. Deficit spending necessitates increasing M2, and in turn is a wealth transfer from the poor and middle class to the rich.
- npoc 3y ago> increase in money supply helps people who are using debt to leverage into assets Not to mention the banksters who are charging interest on every dollar in existence
- Veelox 3y ago> it's clearly horrible for society. Would you be willing to articulate why wealth inequality is bad for society? I am fairly certain that wealth inequality globally is higher than it was in 2000. At the same time, well the poorest globally are doing much much better on average. In my mindset as long as the median is improving and the poorest are improving, the ratio of rich to poor isn't important and isn't clearing a bad thing if the inequality is increasing. You seem to think otherwise, why?
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- AlecSchueler 3y agoYou're quite right that while the rich have gotten richer the poor have gotten richer too, just to a lesser extent. But it doesn't mean the poor are better off in every way. That's only true if we look purely at monetary wealth/purchasing power. But because we live in a society that gives a bigger voice to people with money, many people who are relatively poor can feel increasingly disconnected from a feeling of being an active participant in society. The issues are broad and subtle with wealth inequality, too much for the scope of an HN comment, but I would posit that inequality issue are about more than access to goods.
- Veelox 3y agoThanks for taking the time to have a thoughtful reply. I think pointing to wealth inequality as the reason there is increasing disconnection is a stretch. Yes it's a factor but I don't think it's the chief one. Do you have a pointer to a resource that covers some of the more broad and subtle issues with wealth inequality?
- JKCalhoun 3y ago> I think pointing to wealth inequality as the reason there is increasing disconnection is a stretch. I think it is the chief one. Every time I have seen it suggested that it is some other thing — you don't have to peel but a few layers and find money in fact behind that other thing.
- germandiago 3y agoI think it is more the consequence of intervention than not sharing wealth. I do not have evidence but there are lots of regulations, talking about Spain now, but also in Europe, that leave small players de-facto out by apparently good intentions and make big players almost monopolize markets. Banking system, energy are two examples in Spain but there are lots of small business that get smashed by the fact that by not being profitable enough, causing them economic damage makes them extinguish. Lots of small business have been shutting down in the last few years yet they keep increasing tax rates. Special mention to freelancers, the most mercilessly smashed group here, taking into account that you often cannot control what is coming in the next few months wealth-wise, since that is relatively irregular and self-sustained. The system is built in harmful ways for most of us.
- hospadar 3y ago> It is mostly not smashing people with regulations that do not let them even compete in fair conditions. But making regulations is much easier if you’re very wealthy, so you advocate for regulations that keep you wealthy with a very expensive loud voice and that creates a pretty strong feedback cycle. One way out (seems to me) is chopping the top off the wealth curve and redistributing - it might matter less that poorer folks are getting money and more that extremely wealthy folks have less insanely disproportionate power to make a world that suits only them.
- germandiago 3y agoIn my mind chopping off is just stealing. It also kills incentives to invest and improve, which has negative effects in prices, employment... Deregulation is what allows people to enter markets. Regulation is what puts barriers. There are plenty of times where regulations are just plain absurd and what they contribute to is to kick out smaller players from the market without any real improvement. It also forces consumers to buy more expensive because the market is more monopolized. Safety is the typical excuse. Sometimes it could make some sense but sometimes is just plain cheating. I would let people choose carefully and have ALL the information clear (must be really dilligent about this in laws) about what they are buying or not, contracting or not and let the market decide what those levels of quality for each service are and the value they have.
- andrewmutz 3y agoI don't know about wealth, but in terms of wages the poorest people in the US saw faster inflation-adjusted wage growth than any other income bracket: https://www.epi.org/publication/swa-wages-2022/ https://www.epi.org/publication/swa-wages-2022/
- x3sphere 3y agoWages are definitely up, but if you factor in all the price increases of rent and groceries, I don't see how anything is better for the poorest. I've seen fast food places here hiring @ $20-25 an hour - that would maybe be enough to buy a 1 bedroom condo 4 years ago in less expensive areas, but you certainly can't on that salary now, not at current mortgage rates anyway. So they're basically in the same place it seems. And if we're strictly speaking about the poorest - they also don't have a 401k or retirement savings, so they aren't benefiting from the increase in asset prices.
- runeks 3y ago> Between 2019 and 2022, low-wage workers experienced historically fast real wage growth. The 10th percentile real hourly wage grew 9.0% over the three-year period. This tremendous real wage growth at the lower end of the wage distribution was exceptional, significantly faster than in any other business cycle peak since 1979. “Real” meaning “adjusted for inflation”.
- anonymouskimmer 3y agoAdjusted for the inflation on the items that the poorest tend to spend their money on? The inflation statistics I've seen have a few buckets for certain kinds of expenses, but don't break things down into baskets of goods based on income. https://libertystreeteconomics.newyorkfed.org/2023/01/inflation-disparities-by-race-and-income-narrow/ https://libertystreeteconomics.newyorkfed.org/2023/01/inflat... : As there are no official estimates of inflation by demographic and income groups : In the first post of this series, we present disparities in inflation rates across racial and ethnic groups as well as across income groups between June 2019 and December 2022. We present evidence that during this period, Black, Hispanic, and middle-income households were most affected by rising inflation, experiencing steadily higher price increases relative to the overall average between early 2021 and June 2022. This pattern is largely because a greater share of these groups’ expenditures is devoted to transportation, particularly used cars and motor fuel, categories that led the 2021 inflationary episode. However, over the last five months, as transportation inflation has declined, these gaps have declined as well. : It is likely the case that the same rate of inflation represents a greater welfare loss for lower-income than higher-income households because of the former’s lower capacity for substituting to less expensive goods, greater liquidity constraints, and larger marginal utility of real income.
- Aunche 3y agoMost wealth is the integral of a function based off of predicted future profits and predicted interest rates. It's naturally going to be highly volatile compared to people's wages or home values.
- crazygringo 3y agoThe poorest people don't have wealth. There's nothing to rise proportionally.
- glimshe 3y agoThere is no universe in which the poorest get the same economic benefits as the rich. If the rich saw that happening, they would label it a "market inefficiency" and make it go away (to their benefit, of course).
- robertlagrant 3y agoI don't think so. They'd just figure out a way to do the same thing, or leverage it, or make a business that makes it easier for those people to take advantage of that rule in exchange for a small fee!
- robertlagrant 3y agoThe poorest people are likely living on the streets. It's a different problem problem, as they may well not be engaging in the economy at all. So it's a bit of a silly comparison.
- Racing0461 3y agoAgreed. Because the stock market rose 50% in a year and their money is just most likely in index funds?
- SV_BubbleTime 3y agoHang on, am I missing something? We have rampant inflation - why would you not expect the NUMBER attached to the stock market to go up?
- tunesmith 3y agoWe didn't experience 50% inflation; investing in those parts of the stock market meant that the investment went up by more than inflation.
- randomdata 3y ago> We have rampant inflation Do we? I could have sold wheat for $15 per bushel two years ago. Now I'm lucky if I can get $7. It looks more and more like a disinflationary/deflationary environment to me. CPI continues to show inflation, but the CPI basket measures that which at the end of the supply chain (it is a consumer index, after all), which means that it always lags significantly behind what's going on in the rest of the world.
- anigbrowl 3y agoWhich country are you living in? The US does not have rampant inflation.
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- un-devmox 3y agoI wonder how those 25 richest families fared in 2022 when the markets were tanking?
- ordersofmag 3y agoI'm guessing they lived lives of incredible luxury with no worries about money in any sense other than recreationally. Just like the year before and the year after.