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.
[1] https://www.calstrs.com/investments-overview
[0] https://www.pionline.com/article/20170904/INTERACTIVE/170839...
A booming stock market is irrelevant to most Americans.
[0]: https://www.nerdwallet.com/article/investing/the-average-401...
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.
https://www.nytimes.com/2018/01/22/opinion/bull-stock-market...
The people working 60 hour weeks comprised of 3 part time jobs that refuse to pay out full time hours and benefits just to share a bedroom in south LA while accumulating zero savings? These people are about to experience real pain, and news coverage and forums like HN generally have no concept of the working class.
This is absolutely not true. Most pension plans are at least partially invested in stocks.
Source: https://news.northwesternmutual.com/planning-and-progress-20...
Expensive habits are terrible for your personal finances. I like to look at habits like that in a weekly, monthly, and yearly cost. Seeing that a $40/week habit is $2,080/year really helps me put my spending choices in perspective.
When I was a teen, being poor meant that even if you put that $12 away for another day, it'll just be used the next day to fill your tank. It's not really saving money if you're just putting off buying gas for your car.
It's easy to google median wealth by age and see how people add wealth over a lifetime.
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.
Please tell me you're just parroting something you heard and you don't actually think that.
> 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-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.
However, the context of the discussion is over what term.
The markets are subject to boom and bust cycles. Over the 40 or so year term of retirement plans, there's not a whole lot that a 20 or 30-something can do to benefit from a clearly bull market.
I know that day-to-day, I'm not wealthier or better off because the stock market is doing well. My paycheck doesn't change. I can't sell any stocks to cash in.
And that is the context of the discussion: not that over the long term stocks go up and when you retire you reap the benefits, but rather that over the short term, 90% of the people don't suddenly get enhanced quality of life because the stock market is doing well.
[0]https://www.pensionrights.org/publications/statistic/how-man...
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.
That seems to be a lot less common now.
https://www.investopedia.com/ask/answers/100314/whats-differ...
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.