So who really gets hurt by Stockmarket corrections?

Clawhammer

Clawhammer

Well-Known Member
Silver Stacker
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As you can see by this chart from 2007 on the distribution of US shares, the richest 1% of income earners in the population holds more than 38% of available shares, the next 9% of earners own a further 43% of the stock market's wealth, so combined, the top 10% of earners own 81% of the wealth. Leaving just 19% of what's left to be shared out to the remaining 90% of the population.

So when you wonder about who'll get hurt when the market crashes, don't worry...it won't be you, you don't hold jack! :P
 
Fine print says the figures include 401k's and other retirement plans. I always figured pouring retirement and pension dollars into the stockmarket would create a bubble. But obviously, these folks own so much, that even superannuation finds pale in comparison!

But I'm open to convincing :cool:
 
I disagree - just because wealthy people have the largest stake in it doesn't mean they are hurt the most. Just the opposite I think the small investors get hurt most since losing 50% when you have 100 million is alot less painfull than losing 50% when you have sod all and that was your nest egg.

IMO anyway.
 
Based on the pie chart I think it's fair to say that the top 1% (and maybe the top 10%) could be defined as 'wholesale investors', as opposed to 'retail investors' (which is what most people are). The rules/regulations that generally apply to financial products aimed at retail investors (eg. managed funds) don't apply at a wholesale level. Strangely enough, the rules that are meant to protect retail investors ends up hurting them, because they are forced to invest in sanitised investments that aren't really less risky than the wholesale, over-the-counter deals that get done behind the scenes.

Rich Dad's Guide to Investing (2000) discusses this subject in more detail.
 
Au.Ag.Mzch said:
Strangely enough, the rules that are meant to protect retail investors ends up hurting them, because they are forced to invest in sanitised investments that aren't really less risky than the wholesale, over-the-counter deals that get done behind the scenes.
Click to expand...

The level of risk is directly related to the investors' level of sophistication and knowledge of the investment so those OTC products are actually more risky for retail investors because that class of investor, generally speaking has trouble just getting their head around anything more complicated that a basic transaction.

Case in point (this was mentioned on The Gruen Transfer last week): the average weekly grocery spend is $165 per household. If you're an average shopper, it will take you about 7 years to accumulate enough supermarket reward points to redeem a "free' flight from Sydney to Melbourne but the points expire in 3 years...

...and yet for some reason, whenever I go to the supermarket I wait in line while every second person hands over their reward card and has every item logged and recorded so the supermarket can build up a database on their purchasing habits. Now, unless these people sneak back in after I leave and buy another four times as much stuff so they can actually redeem a flight, I'd take a guess that they don't have any idea what they're doing.

That's just buying milk and bread and toilet paper and that's why most people shouldn't have access to OTC markets.
 
When they ask me at the cashiers if i have the rewards card i usually answer

"i dont like rewards" - they dont find it funny as much as i do.

:D
 
It's interesting how Woolworths will ask you if you have a reward card for any transaction under $30 (i.e. bread and milk) even though you only start receiving "reward points" for every dollar spent over $30 in a single transaction.
 
Consumer spending is what drives the world economy from chicken farms to iron ore production!
 
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