[Peace-discuss] Let them all buy stocks ?

Mon Feb 11 22:00:04 UTC 2019

GET EMAIL ALERTS<https://www.marketwatch.com/tools/alerts/newsColumn.asp?selectedType=3&chkProduct2=0&Column=In%20One%20Chart>One regrettable reason why the stock market’s wild fluctuations don’t hurt most Americans

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One regrettable reason why the stock market’s wild fluctuations don’t hurt most Americans

Published: Feb 11, 2019 12:00 p.m. ET

 Wealth inequality has not have dented some people’s appetite for owning stocks
[quentinFottrellnewnew_100.jpg]<https://www.marketwatch.com/topics/journalists/quentin-fottrell>
By

QUENTIN<https://www.marketwatch.com/topics/journalists/quentin-fottrell>

FOTTRELL<https://www.marketwatch.com/topics/journalists/quentin-fottrell>
WSJ PERSONAL FINANCE EDITOR

[MW-HC824_Wealth_20190128134640_OR.jpg]
Grady Reese/Getty Images
‘Spending on luxury goods largely purchased by wealthy households is highly sensitive to stock prices,’ according to Goldman Sachs.

Social inequality has led more wealthy Americans to own even more stocks than four decades ago.

“Equity holdings have more than tripled as a share of disposable income at the aggregate level and have also risen substantially for middle- and upper-middle wealth groups,” Daan Struyven, senior economist at Goldman Sachs GS, -0.18%<https://www.marketwatch.com/investing/stock/gs?mod=MW_story_quote>said in a research note recently highlighted by Ben Carlson<https://awealthofcommonsense.com/2019/01/who-owns-all-the-stocks-bonds/>, a portfolio adviser at Ritholtz Wealth Management.

‘The wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities, respectively, up significantly from 13% and 39% in the late 1980s.’
—Daan Struyven, senior economist at Goldman Sachs

Stock-price movements are more likely to be felt by luxury goods companies, Struyven suggested. “Equity-price moves do have a meaningful effect on the spending of wealthy households,” he added. “We find evidence that spending on luxury goods largely purchased by wealthy households is highly sensitive to stock prices.”

The richest people in the country have increased their share of stock ownership over the last 30 years, Struyven added. “The wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities, respectively, up significantly from 13% and 39% in the late 1980s,” according to his estimate.

So does this concentration of stock ownership among the rich limit the effects of stock-market fluctuations on consumer spending? Declines in equity prices may translate into smaller declines in consumer spending than previous years, “because wealthy households now bear a larger share of the losses,” Struyven wrote. He expects only a “modest drag” on consumer spending.

The State of the American Wallet

Data is updated as it becomes available.

Data portraits of how the average American family is faring financially.  See full dashboard<https://www.marketwatch.com/graphics/2017/the-state-of-the-american-wallet/>

NET WORTH
$97,300
median net worth of an American family
16.25% from previous report

The total value of all the money in a person's bank accounts and investments, plus property and other assets, minus any debts owed

Median net worth of all families compared to that of top earners

Recession

Max and

min since 1989

Median net worth of top 10% of income earners

Median net worth

SAVINGS
6.00%
of disposable income
1.64% from previous month

The money set aside for future use, either for an emergency, retirement or another long-term goal

Personal saving rate, seasonally adjusted annual rate, recorded monthly

Recession

Max and

min since Jan 2007

Sources: Census Bureau, Commerce Department via FRED (2), New York Fed Consumer Credit Panel/Equifax<https://www.newyorkfed.org/microeconomics/hhdc.html>, S&P via FRED, Energy Information Administration via FRED, College Board

This gap between the rich and everyone else can be seen in overall stock ownership. Just over half of Americans own stocks, this Gallup report concluded<http://news.gallup.com/poll/211052/stock-ownership-down-among-older-higher-income.aspx>. That includes 401(k) plans, shares in an equity mutual fund and/or an IRA account. Two-thirds of Americans do not even participate in or have access to a 401(k) plan, according to the U.S. Census Bureau<https://www.marketwatch.com/story/the-amount-of-americans-not-saving-for-retirement-is-even-worse-than-you-thought-2017-02-21>.

[MW-HC806_gs1_20190128122402_NS.png]

Recommended: There’s been a spike in the number of millennials with $100,000 saved<https://www.marketwatch.com/story/finally-some-good-news-about-millennials-a-growing-number-save-100000-2018-01-23>

Just over half of all Americans own stocks, Gallup found. Two-thirds of Americans do not even participate in or have access to a 401(k) plan, according to the U.S. Census Bureau.

In fact, Bill Bischoff, MarketWatch’s “Tax Guy,” recommends starting making investments for your children’s retirement while they are still in short trousers<https://www.marketwatch.com/story/why-kids-should-open-ira-accounts-2015-03-11>. “I admit that convincing your kids to use their summer earnings to invest in an IRA is a pretty tough sell. But in all seriousness, it’s an excellent idea and one that might not be too outlandish if you encourage your child simply to allocate a portion of his or her earnings to the cause.”

“You could even sweeten the pot a little by offering a ‘match’ in the form of a little extra spending money,” he adds. “Not only will modest contributions add up to significant savings come retirement, but it’s also a way to teach your child an invaluable lesson that is unlikely to be learned in school.”

In the fourth quarter of 2018, the average American’s personal-financial satisfaction did fall from a recent all-time high<https://www.marketwatch.com/story/americans-are-less-satisfied-with-their-finances-heres-why-2019-01-24>, according to a report released last week by the American Institute of CPAs. For five straight quarters previously, Americans were estimated to have grown happier with their finances, but the recent stock-market volatility damaged their confidence.

They’ve reason to be concerned: One in five households has zero or negative wealth, according to a 2017 report by the Institute for Policy Studies, a progressive think tank based in Washington, D.C. What’s more, an even greater share of African-American (30%) and Latino (27%) households are “underwater” financially.

The combined impact of $1 trillion in credit-card debt, $1.4 trillion in student loan debt, and stagnant wages are taking a toll. Not having invested in the stock market at an early age or having the money in adulthood to invest in equities also compounds this issue, experts say.

What’s more, the top 1% of households in the U.S. by income also have far more savings. They have a median savings of $1.1 million across a variety of saving accounts, according to a new analysis of Federal Reserve and Federal Deposit Insurance Corp. data by personal-finance site Magnify Money<https://www.magnifymoney.com/blog/news/average-american-savings/>. The bottom 20% by income have no savings accounts.

The average savings in retirement, money market deposit, checking and savings and certificate of deposit accounts are skewed by higher earners. The top 1% have an average of $2.5 million in accounts, while the bottom 20% have an average of $8,870 saved. The average household has $277,670 in retirement accounts, but the median household only has $72,840.

[MW-GO925_househ_20180824100650_MG.jpg]

Published: Feb 11, 2019 12:00 p.m. ET

 Wealth inequality has not have dented some people’s appetite for owning stocks
[quentinFottrellnewnew_100.jpg]<https://www.marketwatch.com/topics/journalists/quentin-fottrell>
By

QUENTIN<https://www.marketwatch.com/topics/journalists/quentin-fottrell>

FOTTRELL<https://www.marketwatch.com/topics/journalists/quentin-fottrell>
WSJ PERSONAL FINANCE EDITOR

[MW-HC824_Wealth_20190128134640_OR.jpg]
Grady Reese/Getty Images
‘Spending on luxury goods largely purchased by wealthy households is highly sensitive to stock prices,’ according to Goldman Sachs.

Social inequality has led more wealthy Americans to own even more stocks than four decades ago.

“Equity holdings have more than tripled as a share of disposable income at the aggregate level and have also risen substantially for middle- and upper-middle wealth groups,” Daan Struyven, senior economist at Goldman Sachs GS, -0.18%<https://www.marketwatch.com/investing/stock/gs?mod=MW_story_quote>said in a research note recently highlighted by Ben Carlson<https://awealthofcommonsense.com/2019/01/who-owns-all-the-stocks-bonds/>, a portfolio adviser at Ritholtz Wealth Management.

‘The wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities, respectively, up significantly from 13% and 39% in the late 1980s.’
—Daan Struyven, senior economist at Goldman Sachs

Stock-price movements are more likely to be felt by luxury goods companies, Struyven suggested. “Equity-price moves do have a meaningful effect on the spending of wealthy households,” he added. “We find evidence that spending on luxury goods largely purchased by wealthy households is highly sensitive to stock prices.”

The richest people in the country have increased their share of stock ownership over the last 30 years, Struyven added. “The wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities, respectively, up significantly from 13% and 39% in the late 1980s,” according to his estimate.

So does this concentration of stock ownership among the rich limit the effects of stock-market fluctuations on consumer spending? Declines in equity prices may translate into smaller declines in consumer spending than previous years, “because wealthy households now bear a larger share of the losses,” Struyven wrote. He expects only a “modest drag” on consumer spending.

The State of the American Wallet

Data is updated as it becomes available.

Data portraits of how the average American family is faring financially.  See full dashboard<https://www.marketwatch.com/graphics/2017/the-state-of-the-american-wallet/>

NET WORTH
$97,300
median net worth of an American family
16.25% from previous report

The total value of all the money in a person's bank accounts and investments, plus property and other assets, minus any debts owed

Median net worth of all families compared to that of top earners

Recession

Max and

min since 1989

Median net worth of top 10% of income earners

Median net worth

SAVINGS
6.00%
of disposable income
1.64% from previous month

The money set aside for future use, either for an emergency, retirement or another long-term goal

Personal saving rate, seasonally adjusted annual rate, recorded monthly

Recession

Max and

min since Jan 2007

Sources: Census Bureau, Commerce Department via FRED (2), New York Fed Consumer Credit Panel/Equifax<https://www.newyorkfed.org/microeconomics/hhdc.html>, S&P via FRED, Energy Information Administration via FRED, College Board

This gap between the rich and everyone else can be seen in overall stock ownership. Just over half of Americans own stocks, this Gallup report concluded<http://news.gallup.com/poll/211052/stock-ownership-down-among-older-higher-income.aspx>. That includes 401(k) plans, shares in an equity mutual fund and/or an IRA account. Two-thirds of Americans do not even participate in or have access to a 401(k) plan, according to the U.S. Census Bureau<https://www.marketwatch.com/story/the-amount-of-americans-not-saving-for-retirement-is-even-worse-than-you-thought-2017-02-21>.

[MW-HC806_gs1_20190128122402_NS.png]

Recommended: There’s been a spike in the number of millennials with $100,000 saved<https://www.marketwatch.com/story/finally-some-good-news-about-millennials-a-growing-number-save-100000-2018-01-23>