But the dirty secret behind this myth is that, while access to equities is widespread, ownership is becoming more concentrated. Two decades ago, the wealthiest 10 per cent of Americans held 77 per cent of corporate equities and mutual funds, according to calculations by Lyn Alden, a strategist. The poorest 50 per cent held just 1 per cent, leaving the middle-to-upper cohort with 12 per cent.
Today, however, the wealthiest 10 per cent own 92.5 per cent of the market — a “record high concentration”, Alden notes. And while the richest 1 per cent owned just 40 per cent two decades ago, their share stood at 54 per cent in the most recent data from 2022.
Essentially this was all the top 1% and the rest of the 10%ers barely budged in ownership percent. I'd be curious to see the results for top 0.1% and 0.01% as well.
It looks like the top 0.1% barely nudged in the past two decades as well. I would guess that the top 0.1% is probably hard to account for given all the ways the wealthiest can distribute their wealth to make it opaque and hard to granularly track. Those numbers could reflect changes in choices of financial vehicles for the wealthiest households.
Can some smart person here help me understand what this means in terms of average holding value per household? Like how much stock market wealth does the average household own? What's the average amount of stock market wealth held by the first, second, third and fourth quadrille?
If 93% of stock market wealth help by the wealthiest 10% represents $10k, that means something really different than if it represents $1m. Comparing percentages can be really confusing, particularly when talking about wealth.
I can't find any problems with the data, but this is extremely unintuitive! My father who was buying shares decades ago for his personal account had $50 commission fees (not inflation adjusted!!) And like most brokers in that time demanded, he could only buy in 'lots' meaning 100 shares minimum or multiples of that. You had to place a call to your broker, usually when the market was open, which meant the middle of the work day.
Today, practically everyone including fastfood workers has access to 401ks which are extremely cheap. No commission fees upfront. Almost every broker has commission free trading. Not only can you buy 1 share at a time, you can buy fractions of 1 share. You can do it all from your phone, after or before market hours.
Access has been expanded and costs lowered dramatically. So why have the bottom 90% stopped buying shares?
I wanted to link to this since it's the primary source but the amount of paywall forced me to pull this Axios summary instead. Thanks for posting the archive.
the ultra wealthy put all their assets into trusts or charities that dodge taxes and don't require selling anything. They can then take out loans using those assets as collateral when they need cash
Almost all articles of the form "X% of the Y is held by the top Z%" where X > Z leave off one important thing: what % of Y should be held by the top Z%?
One's first though might be that in a truly equitable society, we'd have X = Z for all Z. E.g., the top 10% have 10% of Y, the top 20% have 20% of Y, and so on.
But upon a few moments more thought one will realize that is only mathematically possible if everyone has the same amount. If Y is stock owned by households, for example, such equitability in ownership can only happen if every household has the same amount of stock.
The moment even a single household ends up with either more or less stock than a single other household, then the % held by the top Z% will be >Z%.
This is true for anything, not just financial things. E.g., the top 10% of the winners of the Best Album of the Year Grammy Award have won more than 10% of the Best Album Grammy Awards. The top 10% of pimps manage more than 10% of the whores who work for pimps. The top 10% of pizza sellers by sales sell more than 10% of all pizza sold. The top 10% of muggers are responsible for more than 10% of muggings.
I can't help but think of all the media organs, the WSJ, Bloomberg, FT, Economist, CNBC, Fox Business, et al who cater to this small segment of the population. It must be incredibly alienating to see all this attention paid to well off people when you're on the outside.
> I can't help but think of all the media organs, the WSJ, Bloomberg, FT, Economist, CNBC, Fox Business, et al who cater to this small segment of the population.
I never thought about how small their audience actually is.
That said, I never felt a sense of alienation reading these articles/watching these shows, it really just feels like listening to someone out of touch with reality. I am mostly curious why anyone would bother watching/subscribing to this media, since the amount of information you gain from them is enough to influence you emotionally, but not enough information to gain you a market advantage.
I mean wouldn't you be better off just paying someone to manage your wealth for you or owning shares of a mutual fund? It's like these programs are for people with enough wealth to care about the market, but not enough knowledge to invest it effectively. People who are going to be picking stocks successfully are reading 10-Ks and crunching numbers in excel, not listening to Squawk Box.
> ... I am mostly curious why anyone would bother watching/subscribing to this media, since the amount of information you gain from them is enough to influence you emotionally, but not enough information to gain you a market advantage.
That's the point. They want their audience to be confused. They want them to act on instinct, to spend funds as they choose. It's not about value, it's not about growth - it's about power, first and foremost.
...So can we please stop talking about measures that improve the stock market like they're meaningfully helping average Americans, rather than the very wealthy?
Anyone with a 401k is helped by the stock market trending up. The ultra wealthy make a lot, but it raises up all those retirement accounts too. Without the power of compounding in those retirement accounts the average American would be screwed.
The average American already is skewed. The average 401k is only $129k while the median is a much lower $33k. [1] That’s not even 2 years of rent in most places (and isn’t a lot of money by any definition considering the amount needed for retirement)
I wonder to what extent the distribution is influenced by the significant number of people that plow their savings into paying down their mortgage even when it makes no financial sense (e.g. their mortgage interest rate is 3%). I know many people that do this and don't have any stock market investments beyond their retirement account.
People at different percentiles of net worth do not have the same asset distribution.
It does make financial sense for many though, because risk exists. In a big downturn would you rather be laid off with a paid-for house or laid off with a mortgage and a bunch of stocks that just plummeted in value?
I would much rather prefer the latter actually because the risk is lower. People tend to seriously discount the risk of non-liquidity in these situations, which is the scenario the former sets up. I know multiple people that discovered this the hard way. Houses without mortgages aren't anywhere close to free to live in and they can have very little liquidity in a big downturn.
He's the biggest private farmland owner, at 270,000 acres. The largest private landowner (from a google search, I didn't vet much) is the Emmerson family with 2.411 acres.
Farmland-wise, he owns a drop in the bucket- there's an estimated 900 million total farm acres.
*Largest farmland owner. The largest landowner is John Malone, the telecoms mogul, or the Emmerson lumber baron family if you're counting shared ownership.
Readit News
https://archive.is/emsQK
Top 1%: 40% to 54% -> +14%
Top 10%: 77% to 93% -> +16%
Top 10% minus the top 1%: 37% to 39% -> +2%
Essentially this was all the top 1% and the rest of the 10%ers barely budged in ownership percent. I'd be curious to see the results for top 0.1% and 0.01% as well.
[edit] Found the source numbers:
50-90% https://fred.stlouisfed.org/series/WFRBSN40172
90-99% https://fred.stlouisfed.org/series/WFRBSN09145
99-99.9% https://fred.stlouisfed.org/series/WFRBS99T999258
top 0.1% https://fred.stlouisfed.org/series/WFRBSTP1285
Bottom 50% barely registers, hovering below 1% https://fred.stlouisfed.org/series/WFRBSB50199
It looks like the top 0.1% barely nudged in the past two decades as well. I would guess that the top 0.1% is probably hard to account for given all the ways the wealthiest can distribute their wealth to make it opaque and hard to granularly track. Those numbers could reflect changes in choices of financial vehicles for the wealthiest households.
> [edit] Found the source numbers:
> 50-90% https://fred.stlouisfed.org/series/WFRBSN40172
> 90-99% https://fred.stlouisfed.org/series/WFRBSN09145
> 99-99.9% https://fred.stlouisfed.org/series/WFRBS99T999258
This is the series I think you want.
Share of Corporate Equities and Mutual Fund Shares
If 93% of stock market wealth help by the wealthiest 10% represents $10k, that means something really different than if it represents $1m. Comparing percentages can be really confusing, particularly when talking about wealth.
Today, practically everyone including fastfood workers has access to 401ks which are extremely cheap. No commission fees upfront. Almost every broker has commission free trading. Not only can you buy 1 share at a time, you can buy fractions of 1 share. You can do it all from your phone, after or before market hours.
Access has been expanded and costs lowered dramatically. So why have the bottom 90% stopped buying shares?
accessibility is useless without purchasing power
One's first though might be that in a truly equitable society, we'd have X = Z for all Z. E.g., the top 10% have 10% of Y, the top 20% have 20% of Y, and so on.
But upon a few moments more thought one will realize that is only mathematically possible if everyone has the same amount. If Y is stock owned by households, for example, such equitability in ownership can only happen if every household has the same amount of stock.
The moment even a single household ends up with either more or less stock than a single other household, then the % held by the top Z% will be >Z%.
This is true for anything, not just financial things. E.g., the top 10% of the winners of the Best Album of the Year Grammy Award have won more than 10% of the Best Album Grammy Awards. The top 10% of pimps manage more than 10% of the whores who work for pimps. The top 10% of pizza sellers by sales sell more than 10% of all pizza sold. The top 10% of muggers are responsible for more than 10% of muggings.
I never thought about how small their audience actually is.
That said, I never felt a sense of alienation reading these articles/watching these shows, it really just feels like listening to someone out of touch with reality. I am mostly curious why anyone would bother watching/subscribing to this media, since the amount of information you gain from them is enough to influence you emotionally, but not enough information to gain you a market advantage.
I mean wouldn't you be better off just paying someone to manage your wealth for you or owning shares of a mutual fund? It's like these programs are for people with enough wealth to care about the market, but not enough knowledge to invest it effectively. People who are going to be picking stocks successfully are reading 10-Ks and crunching numbers in excel, not listening to Squawk Box.
That's the point. They want their audience to be confused. They want them to act on instinct, to spend funds as they choose. It's not about value, it's not about growth - it's about power, first and foremost.
[1] https://www.businessinsider.com/personal-finance/average-401...
People at different percentiles of net worth do not have the same asset distribution.
Deleted Comment
I think it’s probably a more equitable mix as I know a lot of Americans who’s generational wealth is tied up in land and not the stock market.
Farmland-wise, he owns a drop in the bucket- there's an estimated 900 million total farm acres.
https://www.landgate.com/news/largest-landowners-in-the-unit...
But what "calculations" is she doing exactly? The source that she's quoting says 53.7% not 93.0% [1].
[1] https://fred.stlouisfed.org/series/WFRBST01122