At least Alphabet, Microsoft and Amazon can afford it.
Nvidia is not losing anything if their stock falls.
So whats left? The typical candidates of course: We poor people. 401k, ETF, etc. we pay the bill.
Nvidia is not losing anything if their stock falls.
So whats left? The typical candidates of course: We poor people. 401k, ETF, etc. we pay the bill.
The real suffering comes from whatever effect there is on the rest of the economy due to a recession, more layoffs, etc.
And some others might need to pull out when its down.
Money doesn't appear out of thin air.
Why would it lead to recession if a handful of big companies lose money they have?
It will show that the USA is in a recession for sure, but otherwise
In fact [fiat] money does appear out of thin air (well, created by banks when they originate loans) - and has to to support a growing economy. Unfortunately, for various reasons, rather too much has been appearing, and has been funneled to the already wealthy.
When stocks get bid up, market valuation goes up far more than the amount of money that changed hands. Most of the market cap appears "out of thin air." It's just what people think it's worth.
And when the stock goes down again, it goes back where it came from.
The investors who bought stock at too high a price lose some of the money they put in, but there are others who never paid that price.
Investors proping up stuff by 20%, 401k and etf etc. regularly invest, investor drop out.
Who loses? 401k and etf.
Money was transfered.
Same shit happen to my company share: Price jumps 40%, company has to buy them because of employer benefits, I auto buy them, price falls back by 40%, what happened?
Investors extracted money out of the company and me.
But the S&P 500 is currently trading at over 2x its average long-term CAPE: https://www.multpl.com/shiller-pe
So it can reasonably be expected to drop more than 50% to return to average long-term valuation levels.
And the "nonfinancial market cap to gross-value-added" ratio is even more insane, I have a site tracking this number: https://sharperatios.com/market-cap-gva.html
Target funds are diversely managed. This isn’t a real concern.
If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?
But there are many funds that have different strategies, both passive and active. Such as by investing based on value, quality, dividends, etc.
I get that the average person doesn’t know this, but the 401k doesn’t inherently force somebody into broad market funds.
I think the main problem with the 401k is that not enough people actually contribute to one. Or they don’t put in enough.
But I very much doubt the average person who’d invested enough over several decades in a 401k feels like they got fleeced.
Note that a pension plan that invests for you blindly is no better - either the returns are so bad that they are a scam, or they are investing in stocks anyway and so you get the same results but less control. Similar for things like social security, they are either worse options or you need to pump stocks.
A welfare state maybe?
We are not going to come up with a market-based solution to fix income inequality. The solution, as much as people in the dwindling middle class resist it, is a strong social safety net coupled with a hard reset on taxation and housing policies. Nobody should be homeless, nobody should be allowed to starve, but you might have to accept that your 401K goes down in exchange for a government guarantee of housing and food.
This is hard for people to accept because they currently have equity in their home or a 401K to save them from starving. But those are transient, individualistic solutions. You can lose your house. You can lose your 401K. Society should be taking care of each other in a broader way than letting everyone accumulate a little, private pile of money.
You mean hedge funds and private equity/private credit that all under perform S&P500?
Everyone is so fixated on the winners, that they completely forget (or aren't even aware) that there a many many times more losers.
Also, selling shares puts them in a better position to survive a downturn (more cash, less debt).
Stock buybacks are also a tax trick.
They're just holistically evil and should have never been made legal.
Whatever financial games they play in the background, doesn't matter when you make that much per 2 quarters alone.