Interesting wealth stats

[Tools]

In the past decade the world population has gone up by a billion people.

To throw around "wealth" statistics as if they were somehow supposed to be static is nonsense.

As to some supposed wealth-gap, more bogus perspectives.

The real truth is that there are more baby-boomers who have worked hard for decades to build their so-called wealth than there are millennials, and the boomers will be dying out within the next decade, passing along their wealth to the generation who seems to be crying the most about it.

I'm sure that all of these millennials will take their new found wealth and spread it around to those following generations. so everybody can be the same and utopia will be achieved.

[Swearengen]

I wonder what the graph would look like on a total return basis, as reinvested equity income makes up a large % of the growth in the long run

Originally Posted by EEpro

Very true. Keep in mind though a lot of the gain is because that chart is priced in a decaying denominator.

I like to check out pricedingold or similar sites that let you plot stock indexes vs gold or oil or coffee beans or whatever you like.

The story of stocks is much different when priced in grams of gold. Yes there are periods of outperformance (if you sell high) but there are also massive periods of time where all the toiling and machinations of the 500 largest US companies failed to produce any value in excess of a lump of yellow metal sitting in a box in your house.

Note: A US Gold Eagle or SA Krugerrand contains 31.1 grams of pure gold.

[Widows Son]

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

[superdog]

Not everyone is or will need equal. That’s not how nature works.

[superdog]

Originally Posted by Widows Son

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

Good post. Can appreciate this.

[EEpro]

Originally Posted by Widows Son

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

So true. Great grandpa worked in the coal mines in Kentucky and Indiana and died at 50. Grandpa was a milk truck driver and repair man who learned to be a pilot in WW2. Dad was the first to go to college and became a teacher. It takes time on target and a track record of good decisions to get out of poverty. No magic bill from congress can do it.

[austinp]

Originally Posted by Tools

In the past decade the world population has gone up by a billion people.

To throw around "wealth" statistics as if they were somehow supposed to be static is nonsense.

As to some supposed wealth-gap, more bogus perspectives.

The real truth is that there are more baby-boomers who have worked hard for decades to build their so-called wealth than there are millennials, and the boomers will be dying out within the next decade, passing along their wealth to the generation who seems to be crying the most about it.

I'm sure that all of these millennials will take their new found wealth and spread it around to those following generations. so everybody can be the same and utopia will be achieved.

I like this. Well put.


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[austinp]

Originally Posted by Widows Son

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

Agree with this. I heard someone say recently that “America’s poor are the richest in the world.”


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[HL65]

Originally Posted by Tools

In the past decade the world population has gone up by a billion people.

To throw around "wealth" statistics as if they were somehow supposed to be static is nonsense.

As to some supposed wealth-gap, more bogus perspectives.

The real truth is that there are more baby-boomers who have worked hard for decades to build their so-called wealth than there are millennials, and the boomers will be dying out within the next decade, passing along their wealth to the generation who seems to be crying the most about it.

I'm sure that all of these millennials will take their new found wealth and spread it around to those following generations. so everybody can be the same and utopia will be achieved.

Exactly

[Krash]

Originally Posted by enjoythemusic

Perhaps, perhaps not.

The problem is that index adds and removes companies. It is not a true benchmark of 'stability' in and of itself. So it's not 'stable'.

Of course their chart excludes adjusting for the actual buying power/value of the underlining currency, which has been devalued (a.k.a. inflation) quite a bit since the 1980's. i'd guess from 1980 to 2020 there has been ~70% devluation of the underlining currency, perhaps more, so adjust the chart accordingly (plus we need to account for the lack of the index's stability as they constantly change companies inside/outside that index).

jmho

LOL.

I've made millions and millions investing in the stock market. Your interpretation of the S&P 500 and various market factors doesn't reconcile with my net worth gains over the last 30 years.

I'm just telling you it's an opportunity to accumulate more wealth based on my personal experience.

In 2008, when the market was at the lowest point, I didn't sell anything, and in fact I invested large sums of money in several bank stocks. This was at a time when everyone thought all the banks were insolvent and everyone was acting hysterical. Well, those bank stocks increased by over 600% in value since that time, and the markets went on to all time highs.

Last March, the Dow Jones dropped from almost 28k to 20k when people began to realize how serious COVID-19 was. The whole planet was in a state of panic, and I moved an additional $million into the stock market when it was at it's lowest point. Eight months later, the market was at an all time high.


So please don't tell me, "perhaps, perhaps not." It's laughable.

Every time the market crashes, that's an opportunity to make money. Lots of it. There is never an exception to this rule.. If aliens attack us, and life as we know it is coming to an end, then maybe that would be an exception...

[enjoythemusic]

Originally Posted by Krash

Every time the market crashes, that's an opportunity to make money. Lots of it. There is never an exception to this rule.. If aliens attack us, and life as we know it is coming to an end, then maybe that would be an exception...

In other words BTFD

Do you think the Fed / Blackrock will allow another crash within the next two years?

[904VT]

Originally Posted by superdog

What’s the reckoning though?

What do people think is going to happen? Another recession? Market correction? Insurrection?

Originally Posted by Krash

LOL.

I've made millions and millions investing in the stock market. Your interpretation of the S&P 500 and various market factors doesn't reconcile with my net worth gains over the last 30 years.

I'm just telling you it's an opportunity to accumulate more wealth based on my personal experience.

In 2008, when the market was at the lowest point, I didn't sell anything, and in fact I invested large sums of money in several bank stocks. This was at a time when everyone thought all the banks were insolvent and everyone was acting hysterical. Well, those bank stocks increased by over 600% in value since that time, and the markets went on to all time highs.

Last March, the Dow Jones dropped from almost 28k to 20k when people began to realize how serious COVID-19 was. The whole planet was in a state of panic, and I moved an additional $million into the stock market when it was at it's lowest point. Eight months later, the market was at an all time high.


So please don't tell me, "perhaps, perhaps not." It's laughable.

Every time the market crashes, that's an opportunity to make money. Lots of it. There is never an exception to this rule.. If aliens attack us, and life as we know it is coming to an end, then maybe that would be an exception...

No reckoning. It's just a repeat of the 70's and 80's without the stratospheric interest rates to help savers.

But the real difference this time is over a decade of quantitative easing programs. The pullback last year was floated with trillions in QE programs. Eventually that money runs out and/or currency takes a drop without real GDP growth off-setting.

At the end of the day I guess it doesn't matter if your time horizon is long enough, but we shouldn't discount the impact this has on those in distribution phase. They may not have millions to invest at the low points like smart money does, but they sure are the driver of mass consumption aren't they. Unless you're a high-end luxury brand with inelastic demand or a secular growth company, not going to be positive. Otherwise we're just fooling ourselves, expecting consumption levels to remain. Imagine your real wealth being eroded away in devaluing currencies and inflation baskets not accurate to consumption habits. I wonder what today's inflation would look like using the 1990's CPI basket. The movie the Big Short was pretty interesting.

[Atone]

Originally Posted by Krash

LOL.

I've made millions and millions investing in the stock market. Your interpretation of the S&P 500 and various market factors doesn't reconcile with my net worth gains over the last 30 years.

I'm just telling you it's an opportunity to accumulate more wealth based on my personal experience.

In 2008, when the market was at the lowest point, I didn't sell anything, and in fact I invested large sums of money in several bank stocks. This was at a time when everyone thought all the banks were insolvent and everyone was acting hysterical. Well, those bank stocks increased by over 600% in value since that time, and the markets went on to all time highs.

Last March, the Dow Jones dropped from almost 28k to 20k when people began to realize how serious COVID-19 was. The whole planet was in a state of panic, and I moved an additional $million into the stock market when it was at it's lowest point. Eight months later, the market was at an all time high.


So please don't tell me, "perhaps, perhaps not." It's laughable.

Every time the market crashes, that's an opportunity to make money. Lots of it. There is never an exception to this rule.. If aliens attack us, and life as we know it is coming to an end, then maybe that would be an exception...

Someone struck a nerve. Lol

[Krash]

Originally Posted by Atone

Someone struck a nerve. Lol

No, I just get annoyed when someone dismisses my expertise and acts as if they know more about financial markets than I do.

[Krash]

Originally Posted by 904VT

Imagine your real wealth being eroded away in devaluing currencies and inflation baskets not accurate to consumption habits. I wonder what today's inflation would look like using the 1990's CPI basket. The movie the Big Short was pretty interesting.

I agree with some of what you're saying. Interest rates should have been raised by the Fed the last time they met. They should actually be raised 3 or 4 times over the next 12 to 18 months at 25 basis points per each instance. In that case, interest rates would still be relatively low by historic standards.

I'm not sure we're what you're asserting with your last comment. Having wealth is better than not having wealth when it comes to inflation.

[904VT]

Originally Posted by Krash

I agree with some of what you're saying. Interest rates should have been raised by the Fed the last time they met. They should actually be raised 3 or 4 times over the next 12 to 18 months at 25 basis points per each instance. In that case, interest rates would still be relatively low by historic standards.

I'm not sure we're what you're asserting with your last comment. Having wealth is better than not having wealth when it comes to inflation.

I'm implying that real wealth is already being eroded, unbeknownst to most because the reference basket is not real. Take a look at what inflation would be today using the 1990's CPI basket. Inflation is hiding the asset bubbles bursting.

[TRS1]

Originally Posted by Widows Son

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

Great post.

[Krash]

Originally Posted by 904VT

I'm implying that real wealth is already being eroded, unbeknownst to most because the reference basket is not real. Take a look at what inflation would be today using the 1990's CPI basket. Inflation is hiding the asset bubbles bursting.

Yes, I get what you're saying about how the inflation index has changed in terms of how it's calculated.

It's not preventing people from accumulating more wealth. Multi-million dollar homes are in high demand. Yachts, private jets, fancy sport cars, luxury watches are in huge demand.

When there is another market correction, and there most certainly will be, the market will come back stronger than ever. It always does.

[huncho]

Originally Posted by superdog

What’s the reckoning though?

What do people think is going to happen? Another recession? Market correction? Insurrection?

the housing market is my biggest worry as something that can start it

[Krash]

Originally Posted by huncho

the housing market is my biggest worry as something that can start it

Housing correction is inevitable, and maybe sooner than you think. Rates have to come up because of inflation, and that's never good for the housing market.

It's not going to be as bad as 2008, but it's inevitable. It will bounce back. It always does.

[904VT]

Originally Posted by Krash

Yes, I get what you're saying about how the inflation index has changed in terms of how it's calculated.

It's not preventing people from accumulating more wealth. Multi-million dollar homes are in high demand. Yachts, private jets, fancy sport cars, luxury watches are in huge demand.

When there is another market correction, and there most certainly will be, the market will come back stronger than ever. It always does.

I'm not implying it prevents anyone from accumulating wealth. What I'm saying is wealth outside of hard assets is not what it seems right now. It's paper wealth and a big difference today between nominal and real wealth. Bitcoin here, NFT there, Parriot Coin or whatever else is in the works.

Regarding multi-million dollar homes being in high demand, it is proving my point. Look at what has happened to housing markets. Just a few years ago much lower pricing for those houses. The housing bubble is being masked by inflation. It's going to take a few years to be seen fully. That's just one bubble. Wealth is so much more than stocks and bonds though that is our reference usually...or how many luxury goods we own is considered wealth today. Meanwhile inflation is slowly eroding your purchasing power (even if still extremely wealthy). Hopefully you outlive your wealth, but the demographics in distribution phase right now means inflation is going to impact the broad economy more significantly going forward. Everyone not considered "wealthy" contributes significantly to an economy. Eventually without their consumption, money for the "wealthy" will dry too. Next generation's consumption habits are not very friendly for the businesses most of us work or own. Guess we'll see right

[turkeysub93]

Originally Posted by Widows Son

Yes, the rich are getting richer, but the poor are getting richer too, just at a slower rate. It's tough to define "Poor," but at least in the US I'd venture to say that even the lower middle class have a life style unheard of if compared to their grandparents. Few people not living in extreme rural areas all have indoor plumbing, furnaces, air conditioning, 1-2 cars, smart phones, access to healthcare, education, it goes on and on. There is no such thing as equality of outcome. Opportunity yes.. I can't run a 4.0 40, or do brain surgery. Maybe I'm being oppressed??? I need to see how I can qualify for the NBA or CEO of a Fortune 500 company.

Obama phone!

[Highend7]

Originally Posted by Krash

No, I just get annoyed when someone dismisses my expertise and acts as if they know more about financial markets than I do.

Sorry buddy. I'm sure no harm was meant.

[huncho]

Originally Posted by Krash

Housing correction is inevitable, and maybe sooner than you think. Rates have to come up because of inflation, and that's never good for the housing market.

It's not going to be as bad as 2008, but it's inevitable. It will bounce back. It always does.

for sure inevitable, lot of people are gonna get screwed over and i'm surprised they're not realizing it as they chase these crazy auctions

[904VT]

Originally Posted by Krash

Housing correction is inevitable, and maybe sooner than you think. Rates have to come up because of inflation, and that's never good for the housing market.

It's not going to be as bad as 2008, but it's inevitable. It will bounce back. It always does.

Originally Posted by huncho

for sure inevitable, lot of people are gonna get screwed over and i'm surprised they're not realizing it as they chase these crazy auctions

The housing correction has already happened guys. Just hasn't shown on paper values yet. Covid driven relocation, remote work, and inflation have all propped up housing prices. Big drop shown in housing demand just recently in the numbers. Utilities, property taxes, all upped increasing the servicing expenses of owning a property. The long run is predictable now.

https://news.yahoo.com/us-home-sales...150624777.html

We're in what would be considered the "Ponzi" phase/unit of the Minsky framework to asset bubbles. This is what a bubble looks like in real time.

[enjoythemusic]

Agree housing is troublesome, I see it right outside my door per se as live within a VERY hot market. Neighbor is an RE salesman, seen four homes sell near me, one already was re-flipped for ~$50k more five months later (with only $10k in her to paint and fix stuff).

Ongoing high food inflation, and perhaps oil, will be interesting to keep track of.

[austinp]

Originally Posted by 904VT

The housing correction has already happened guys. Just hasn't shown on paper values yet. Covid driven relocation, remote work, and inflation have all propped up housing prices. Big drop shown in housing demand just recently in the numbers. Utilities, property taxes, all upped increasing the servicing expenses of owning a property. The long run is predictable now.

https://news.yahoo.com/us-home-sales...150624777.html

We're in what would be considered the "Ponzi" phase/unit of the Minsky framework to asset bubbles. This is what a bubble looks like in real time.

A lot of the home buying in my area have been all cash deals and not the heavily leveraged loans from the 08 housing crash. What are your thoughts on the differences between the two situations? When housing values eventually go down it doesn’t seem that it will be as bad as 08. Forgive me as I don’t know anything about this stuff. Just curious.


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[904VT]

Originally Posted by austinp

A lot of the home buying in my area have been all cash deals and not the heavily leveraged loans from the 08 housing crash. What are your thoughts on the differences between the two situations? When housing values eventually go down it doesn’t seem that it will be as bad as 08. Forgive me as I don’t know anything about this stuff. Just curious.


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It implies there is a shadow banking system. What I mean by that is not something illegal rather that funding is coming from non-traditional sources if all cash purchases. Redeeming of financial assets? Crypto redemption converted to cash? Downsizing by Baby Boomers due to aging(if so who is going to buy the larger houses demographically speaking)?

Every bubble is different. This one is masked by demographics shifts, inflation, and "free money/capital". 08 was driven by repackaging of loans (and tranches i.e. breaking a loan down into investible pieces with help of investment banks) to make more marketable, thus giving greater likelihood of borrowers getting housing loans. 08 further driven down by CDS products. I think the market forgets the direct injection of capital known as TARP.

My feeling is this bubble you won't see collapse or even notice it, unless looking at inputs beyond the first level. Inflation can prop up housing pricing, seeming like there was no collapse.

Some reading if interested in learning more.

40% reduction in lumber prices, but no resulting drop in housing prices (though we did see demand reduction). Remember lumber drove housing and renovation pricing sky high.

https://markets.businessinsider.com/...030520545?op=1

https://www.msn.com/en-us/money/mark...ate/ar-AALowQE

https://www.pimco.com/en-us/insights...onomic-journey

Homes are most people's largest source of wealth.

[enjoythemusic]

Originally Posted by 904VT

I wonder what today's inflation would look like using the 1990's CPI basket.

There's a site for that.

http://www.shadowstats.com/alternate_data

[904VT]

Originally Posted by enjoythemusic

There's a site for that.

http://www.shadowstats.com/alternate_data

That’s interesting….glad you looked into what I was hoping some would. When I looked into prior, what I’ve found is that we are today at 1980’s inflation levels but without the 1980’s interest rates to help savers offset. Some will say supply chain but I think it has more to do with M1.

Now what incentive is there to underreport inflation and use a CPI basket with a low R^2. Perhaps lower inflation expectations help under-funded defined benefit plans pay less into the plan.