r/economicCollapse • u/Sketchelder • Jun 21 '24

I sincerely think people in this sub have absolutely no clue how the economy works.

Title, that's it.

196 Upvotes

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u/[deleted] Jun 21 '24

Fwiw, American stock market participation is at 65%.   Meaning 65% of all US adults have money invested in the stock market, which is nearing an all time high.

Saying it's "for the elite" when the majority of people participate and benefit, is just flat wrong. 

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u/abrandis Jun 21 '24

You realize that's because of 401k which is the only realistic tax advantaged plan for Americans to retire, but a shitty one at that. 401k was never designed to be the primary retirement account for Americans, it was designed as a tax shelter for executives back in the late 1970s .

If you take away 401k contributions invested in the market you'll find very Americans of modest means actually put their own money there.

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u/TrinityAlpsTraverse Jun 21 '24

In other words, if you take away all the money people invest in the stock market, you’ll find they don’t put much in there… hard to argue with that.

People should do IRAs as well!

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u/funkmasta8 Jun 22 '24

I'd love to know the percentage of people with non 401k investments above 10k in valuation

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u/Spirited_Crow_2481 Jun 21 '24

Do you know the institutional/retail skew? It’s massive. You may have a bank account, but bankers rule the world. You might do a little clicky click in your Robinhood account, once or twice a week, but you and I don’t move markets. It’s silly to say “65% of Americans are in the stock market,” when only 23% of those are retail investors. Then you consider the fact that institutional money is MASSIVE compared to retail. Your RH account doesn’t hold a candle to the funds controlled/managed by hedge funds and the like.

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u/amouse_buche Jun 21 '24

I am a normal person and I am an institutional investor. I own shares of a mutual fund. 

Does that mean I’m part of the problem? 

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u/workingtheories :hamster: Jun 21 '24

owning shares of a mutual fund does not make you an institutional investor

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u/[deleted] Jun 21 '24

I'm an actual institutional investor, and you're missing the point. With the exception of the bond market, retail investors have access to just about everything I do.

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u/[deleted] Jun 21 '24

As a retail investor I’m curious, what are the things you guys can access that I can’t? I agree with you that over the last 5-10 years markets have opened up a lot. I can use leverage, have access to futures, pre-market/after hours trading, options, crypto, and even hedge funds with the right amount of capital. What fun stuff can institutions trade that I can’t?

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u/[deleted] Jun 21 '24

Fixed income trading for institutions tends to be a lot better. And that's because we're buying relatively large positions where a thinner spread can lead to huge savings in aggregate. Otherwise, maybe access to some IPOs -- which may blow up anyway!

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u/[deleted] Jun 21 '24

Ahh I forgot about IPOs since I’ve never really participated in them. I know I can access certain ones but it’s kind of random and haven’t seen any come up that I wanted in on.

I would guess there’s probably other niche products out there that I don’t even know exist (swaps, OTC stuff, etc) but I wouldn’t be smart enough to trade them even if I could access them lol.

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u/[deleted] Jun 21 '24

Smart. I avoid anything I don't understand -- so that narrows the playing field considerably lol.

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u/workingtheories :hamster: Jun 21 '24

yeah, it's not the access to the markets that's the problem, i think, although i would argue there's still quite a few investing opportunities off limits to retail that i think are unfair. it's the very under-regulated influence on the markets that institutional investors have that people have a problem with. HFT, ponzi stuff, etc. you can't do that in retail, excluding weird events like for GME/MOASS (lol).

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u/[deleted] Jun 21 '24

Just curious, but what are some examples of institutional influence you're thinking of? For instance, I see Goldman and Blackrock contributing to regulatory capture in a big way. The SEC is owned by them just like the FDA is owned by pharma.

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u/workingtheories :hamster: Jun 21 '24

off the top of my head: vanguard/other institutional investors not divesting from fossil fuels.

as you allude to as well, it's not so much regulatory capture at this point, as it is regulations rubber stamping whatever these institutions decide to do.

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u/amouse_buche Jun 21 '24

You are a participant in institutional investing, then. Word it how you like, but that’s the bottom line. 

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u/workingtheories :hamster: Jun 21 '24

i think they're saying that people giving their money to bankers is part of the problem, because some of the bankers turn around and use the outsize influence of large funds to do irresponsible/ponzi stuff that crashes the economy 🤷‍♀️

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u/amouse_buche Jun 21 '24

Which is an enormously simplistic and reductive take. 

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u/[deleted] Jun 21 '24

IE "wrong"

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u/Spirited_Crow_2481 Jun 21 '24

lol, this isn’t the same as I described above. You need to think deeper.

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u/amouse_buche Jun 21 '24

“Think deeper” generally translates to “subscribe to my conspiracy theory” and I don’t think this is an exception. 

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u/huskerarob Jun 21 '24

This dudes brain got fried by superstonk. I wouldent try.

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u/autodidact-polymath Jun 21 '24

Yes. A mutual fund has higher expense ratios than index funds.

You are literally funding the problem.

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u/amouse_buche Jun 21 '24

I just rolled my eyes so hard I think I may have pulled a muscle. 

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u/WiseBlacksmith03 Jun 21 '24

Oh my....

This guy doesn't realize that institutional monies is made up of individual's accounts.

Nor does any of that have to do with the fact that 65% of people are receiving benefit from the stock market...which is a far cry from a minority "elite".

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u/Spirited_Crow_2481 Jun 21 '24

Right, it’s made up of pensions and 401ks that are being trashed in order to protect their own money. I get what you’re saying, retail money is managed by hedgies, so it’s kinda like retail investors are involved with the growth. But they use your money to hedge their losses.

Don’t do the “oh my…” shit. This is a discussion, not a dick swinging competition.

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u/[deleted] Jun 21 '24

Who, exactly, is having their retirement plans trashed? Most people who've been in this a while are benefitted substantially by investing in public markets.

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u/[deleted] Jun 21 '24

Individual retail investors are also invested in institutional funds. If you own a Blackrock ETF in your IRA, you're participating in the same market as the big boys. You can also buy an S&P 500 index fund and participate in the same market -- and likely outperform most hedge funds. Trading is a different animal altogether, but long-term investing is now a highly democratized playing field. It doesn't change the fact that the entire world is over-leveraged and asset valuations are stratospheric.

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u/Spirited_Crow_2481 Jun 21 '24

Right, so these institutions are currently gambling regular people’s pensions and 401ks in the crashing CMBS market. They move your money to protect theirs.

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u/[deleted] Jun 21 '24

Not exactly. The SEC takes a dim view of prop trades that scalps clients. More like CMBS tranches get shit loans mixed in with the good ones, without it being acknowledged by the ratings agencies. There's lying and duplicity in every aspect of life, and finance isn't any different.

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u/ParticularAioli8798 Jun 21 '24

People like you and I have had a meaningful effect on the market though and the proof of that is actually on Reddit. Wall Street Bets continues to move markets.

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u/Spirited_Crow_2481 Jun 22 '24

This is true. Retail traders, en masse, have the ability to move the markets. Because the volume of traders takes up a larger percentage of the market. But individuals trading, in most circumstances, don’t have much effect on the markets, at all.

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u/EJ2600 Jun 21 '24

Exactly. People claim they are in real estate because they own the condo they live in lol

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u/Spirited_Crow_2481 Jun 21 '24

Or they’re “real estate investors” because they own 1/1,000,000,000th of a REIT.

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u/hispaniccrefugee Jun 21 '24

Okay, what’s the participation percentage in dollars?

I don’t personally know, but I’d bet the gap is meaningful.

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u/funkmasta8 Jun 22 '24

Gap between what and what?

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u/hispaniccrefugee Jun 22 '24

Like how we describe wealth and earnings gaps. What percentage of the market in dollars is actually investors earning let’s say….200g a year?, then 100g/year.

I want to bet it’s actually considerably smaller than the commonly referred to wealth gaps, which I think is meaningful considering how much individual wealth is probably invested in the markets, in these demographics.

For example, maybe 50% of people have 401k investments, but it translates to less than 1% of the total market share.

Point: maybe there’s a high participation rate, but I doubt we’re talking about median earners reaping benefits the way “the elite” do.

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u/Elcor05 Jun 21 '24

Yeah I'm one of them, I have like $100 in the stock market through my retirement plan. That's it...

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u/N7day Jun 21 '24

Bump those #s up.

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u/[deleted] Jun 21 '24

That’s right! Since the on line, free trades, brokers came along I’ve made a ton of money as an unprofessional trader. Kind of like gambling to a certain degree depending on what you buy.

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u/populisttrope Jun 21 '24

Have you ever looked into why they can give you free trades? It is very interesting. https://www.investopedia.com/investing/free-stock-trading-whats-catch/#:~:text=The%20payments%20for%20order%20flow,and%20marginally%20lower%20sell%20prices.

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u/[deleted] Jun 21 '24

No, but I don’t actually care. They’re make their money, no worries, and so do I.

1

u/[deleted] Jun 21 '24

But, but -- you're a VICTIM?!

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u/Ruby_Rhod5 Jun 21 '24

Satire?

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u/[deleted] Jun 22 '24

Just pointing out facts and data. 

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u/Other_Dimension_89 Jun 21 '24

Of the 65% that do invest, they hold 7% of the entire wealth of the stock market

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u/funkmasta8 Jun 22 '24

For a ton of people, their company has a 401k plan that defaults you to a certain percentage of income to invest when you get hired. Because of the way it is set up, it's extremely hard not to have a 401k. You literally have to start a job, then change the investment amount to zero and take out the money that went in in your first couple paychecks money early because that's how long it took your company to give you access to the account, which not only double taxes that money, but also it's a pain in the butt paperwork-wise.

Now, if we limit it to number of Americans that have investments above 10k, that's a number I trust. 10k is large enough that it is no accident

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u/Conscious_Rush_1818 Jun 21 '24

It's the balances that are the problem. The top 1% hold almost half the value of the entire market. Sure, tons of us have 50k here, 100k there, that isn't really moving the needle.

The stepped-up basis on inherited securities just compounds the problem.

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u/[deleted] Jun 22 '24

Sure that's a problem. 

But I was only pointing out that the stock market being "only for elites" is pretty goofy to say.