And what about the large number of people who don't? It's nice to think that all economic growth since then was positive-sum wealth creation with no upward wealth transfer at all, but that seems rather unlikely, given all we know at how inflation and other economic phenomena work. There's some serious filter-bubble thinking going on in this discussion.
The "net worth" of the mega-rich, at least in the US, is basically just the number of shares they hold in whatever company they founded multiplied by the price per share at any given moment. It's completely fake and has nothing to do with "economic growth". If you want to point fingers, blame the Fed for setting the stage for an epic asset inflation.
Are shares assets that can be used as security in economic transactions? They sure are. Does that give such owners of shares massive economic leverage? It sure does. Do people without such assets find themselves worse off in economic transactions? Of course. I think you understand those things quite well.
No. Lots of people can't afford to buy shares, but do have to struggle with higher prices as consumers. This is the wealth transfer that grumpy socialists like myself find objectionable. I'm all for rewarding innovation, but things like changing packaging to include less product for the same price don't seem at all innovative to me.
Literally everyone invested in the S&P 500 (the most commonly touted investment strategy requiring zero effort or insight) has doubled their investment value since the low of March 2020 (the dates used in the article).
Yes, it's a curious coincidence that the people writing this report, surely in good faith, just happened to pick March 2020 as the point of comparison.
I thought we were done seeing this trick in 2021, when there were all those news articles describing how much money billionaires had "made" "during the pandemic" which also used March 2020 as their baseline.
Thanks, so I take it the parent's "zero effort or insight" characterization is in an implicitly riskier context (I was interpreting it as a synonym for "safe").
On top of that, the default “safe” investment, US investment grade bonds, are actually down since March 2020 (which is highly unusual for bond funds over that long of a period). So a typical 401k investment of 70/30 stocks:bonds would be expected to have done significantly worse than 100% stock.
Your 401(k) is probably set up to invest in what's known as a target-date fund, where you pick a year (often rounded to the nearest one divisible by 5) you want to retire, and the fund manager allocates among various risk asset classes based on that. Almost always, the further away you are from retirement, the more risk you can take; when you near retirement, it's probably almost all in bonds and other less risky assets.
Sometimes employer-managed 401(k) fund managers take a much larger management fee compared to, say, Vanguard, which adds up over decades, so you could be mad about that.
That depends entirely on the ratio between how much you already had invested at the start of that time period versus how much you invested throughout that time period. If the ratio is nearly infinite (i.e., you had a lot to begin with and hardly added any more) then yeah your S&P500 balance should've grown about 100%. But if the ratio is nearly zero (i.e. you didn't have much at all invested at the start but contributed heavily since then) and for simple math we say that the S&P500 grew linearly, then you should expect only a 50% growth because only the early contributions rode that train while the recent contributions hardly had a chance. In reality it'll be somewhere in between.
And as pointed out by others, this assumes S&P500. If you're in a lifecycle fund instead, that's a bit like having mostly S&P500 when you're young and hardly any when you're old.
Rate of return = (current value of the account - value of all of your contributions) / current value of your account. That is to say, the total growth of your contributions.
Also, SPY high in Feb 2020: $330. Did the world's richest men (and everyone else who invested in SPY) lose a third of their wealth in the month back then?
And most of that growth is just on paper; it represents very little growth in actual spending power. It can be explained by (1) some economic recovery after COVID and (2) devaluation of the dollar.
You have more dollars, but they're worth significantly less, so you're really not much better off.
The more interesting question would be how did the 5 richest people in 2020 do. My guess is some did better than others. And how does that compare to the S&P.
If the goal is to write a clickbait article, then there is no better time to baseline against to prove the story author is building .
March 2020 is the lowest markets went in the early days of COVID, and last few years have been amazing for any asset holders unlike any other in recent memory .
Since 2020, eh? Well, that's a familiar-sounding year... how much has it increased since 2019? And don't forget inflation. (Oh wait, it's from Oxfam, cherrypicking years and 'forgetting' about inflation is just par for the course with their reports.)
We all seem to love to deliberately ignore the meaningful difference between someone whose wealth goes from $10B to $20B and someone whose wealth goes from $10K to $20K. One person can now buy/exert even more monstrous political power and influence over government and the media than before, while the other might have enough for a down payment on a car. But, yea, I guess they're totally the same thing.
> One person can now buy/exert even more monstrous political power and influence over the media than before
People say that, but if that were true, we would have a President Bloomberg sitting in the White House now, with perhaps a Koch brother as the junior senator from Kansas. Tabloids wouldn't be printing Bill Gates's association with Jeffrey Epstein. Ocasio-Cortez would still be a bartender.
In reality, it turns out that being rich is neither necessary nor sufficient for being powerful, influential, or noteworthy of any kind.
> I guess they're totally the same thing.
Sure, mathematically it's literally the same thing; both people have doubled their wealth. If your argument is that rich people have it easier than poor people, that's absolutely true. If your argument is that the same market forces that made someone's $10k worth of stocks become $20k should not have the same effect on someone else's $10B worth of stocks, well, I guess you could start by blaming the Fed.
You don't have to be an elected official to wield political power, at least in the USA. Wealth is pretty much frictionlessly convertible to and from political power through donations, lobbying and other means. I am sure that Bezos, Musk, Ellison, the Kochs, and so on can have the ear of any State governor or US representative within 30 minutes if they wanted. And no legislator will support legislation that their major donors oppose. Everyone is aware of the huge problem outsized-money plays in politics.
> with perhaps a Koch brother as the junior senator from Kansas.
The Koch brothers' years-long efforts to use their wealth to influence government has led to a Supreme Court that is about to massively curtail the regulatory authority of federal agencies, so that's a pretty bad example to use if you want to argue that there isn't a strong connection between wealth and political power.
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[ 2.5 ms ] story [ 40.4 ms ] threadSPY low in March 2020: $228
SPY now: $475
This is similarly insightful. It’s unsurprising that the richest companies are owned by the richest men.
Edit: This is not sarcasm - I'm not knowledgeable about investment.
See: https://www.portfoliovisualizer.com/backtest-asset-class-all...
Sometimes employer-managed 401(k) fund managers take a much larger management fee compared to, say, Vanguard, which adds up over decades, so you could be mad about that.
And as pointed out by others, this assumes S&P500. If you're in a lifecycle fund instead, that's a bit like having mostly S&P500 when you're young and hardly any when you're old.
Nothing to see here, move along. Back to work.
We do not pay you for reading HN.
Back to work I said!!
You have more dollars, but they're worth significantly less, so you're really not much better off.
Wealth taxes are an obvious response.
They are difficult and distortionary but for social cohesion there needs to be some levelling
It is not a sin to be rich
It is a sin to be poor
Being poor is a sin of the rich
Plus I’m pretty sure CPI does not include private islands and rocket ships.
[1]: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=2...
March 2020 is the lowest markets went in the early days of COVID, and last few years have been amazing for any asset holders unlike any other in recent memory .
I've about doubled my wealth since 2020 too and I'm just an average joe... Most of my wealth is in stocks and real-estate.
People say that, but if that were true, we would have a President Bloomberg sitting in the White House now, with perhaps a Koch brother as the junior senator from Kansas. Tabloids wouldn't be printing Bill Gates's association with Jeffrey Epstein. Ocasio-Cortez would still be a bartender.
In reality, it turns out that being rich is neither necessary nor sufficient for being powerful, influential, or noteworthy of any kind.
> I guess they're totally the same thing.
Sure, mathematically it's literally the same thing; both people have doubled their wealth. If your argument is that rich people have it easier than poor people, that's absolutely true. If your argument is that the same market forces that made someone's $10k worth of stocks become $20k should not have the same effect on someone else's $10B worth of stocks, well, I guess you could start by blaming the Fed.
The Koch brothers' years-long efforts to use their wealth to influence government has led to a Supreme Court that is about to massively curtail the regulatory authority of federal agencies, so that's a pretty bad example to use if you want to argue that there isn't a strong connection between wealth and political power.