OT - Dow plunges 1,175 - worst point decline in history

[echappist]

Originally Posted by cfox

Household debt-to-income is the lowest it's been since 2002. The unemployment rate is at multi-decade lows. Of course the wealth gap is growing, it always will as long as it's legal to earn interest, but to assert that a rising stock market and growing economy don't in any way benefit "the masses", is absurd. It is a talking point for politicians, not actual analysis. I'm not saying you have asserted that, but others here have.

your first point is irrelevant, as it does not address specifically debt-to-income dissected by quintile/decile

as for your latter point (and i'm addressing rising stock market per se), people cannot receive any first order benefits (viz. capital gains or dividends) if they don't own stocks directly or indirectly (via index funds). And for those at the 50th tile, it's a pittance. Median net-worth excluding home equity is barely 100k for those 60-64. Assuming 60% investment in stocks going by the rule-of-thumb that %stock = (100- age)%, that's an exposure of $40k.

Even assuming all 100k is invested in stocks, how large is that number? Well, let's just say that i earn a civil servant's salary and sock away the maximal amount, with 5% employer match. It would take me about 6 years to hit 100k in equities, from contributions alone. That the median (much less 40th tile) individual at 60-64 (when s/he has accrued the most asset) has total asset of ~100k after 30-35 years of working would suggest that the notion that the "masses" would receives any significant benefit from the stock market is absurd, purely based on how little that person owns in equities...

[cfox]

Originally Posted by echappist

your first point is irrelevant, as it does not address specifically debt-to-income dissected by quintile/decile

as for your latter point (and i'm addressing rising stock market per se), people cannot receive any first order benefits (viz. capital gains or dividends) if they don't own stocks directly or indirectly (via index funds). And for those at the 50th tile, it's a pittance. Median net-worth excluding home equity is barely 100k for those 60-64. Assuming 60% investment in stocks going by the rule-of-thumb that %stock = (100- age)%, that's an exposure of $40k.

Even assuming all 100k is invested in stocks, how large is that number? Well, let's just say that i earn a civil servant's salary and sock away the maximal amount, with 5% employer match. It would take me about 6 years to hit 100k in equities, from contributions alone. That the median (much less 40th tile) individual at 60-64 (when s/he has accrued the most asset) has total asset of ~100k after 30-35 years of working would suggest that the notion that the "masses" would receives any significant benefit from the stock market is absurd, purely based on how little that person owns in equities...

Much larger than it would be if the market were falling. Talk about irrelevant. I get the sense that actual adults here have the notion that if everyone can't benefit equally, then no one should benefit at all. Life is not kindegarten. Being poor sucks in a lot of ways, I know because that's how I grew up.

[jlwdm]

Originally Posted by Big Dan

Anyways, let me know when the masses are getting a piece.

I am a believer that you make your own breaks and success. There are good jobs available in good times and bad if you look hard enough for them. If someone wants to stay more in the masses that is fine. They might be in a job with fewer hours worked and less stress coupled with more family time or time to do other things like biking. Money should not be the only consideration of a job. But you can't normally have regular hours and a job with lower stress and make a lot of money.

Personally I want a job where I am compensated for my performance.

Unfortunately, I am a spender. I made decent money for most of my life, but when I hit a retirement age I did not have near enough money to retire. I started working for myself and worked a ridiculous number of hours, but I saved enough to never worry about money for retirement. I still work though. A lot of people would not have wanted to commit the time to working that I did, and probably would have lived better lives in many ways during those years.

Life has many trade offs. Everyone needs to figure out the things that are most important in life to them. The problem is we are such a country of consumers that it is harder for people to save. We buy so many things that are not needed I am as bad as anyone in this regard.

We need to gravitate towards the more traditional European lifestyle of buying fewer things, but quality items that are passed down from generation to generation. I don't see it happening though. Probably not happening as much anymore in Europe either.

Jeff

[Big Dan]

Originally Posted by jlwdm

I am a believer that you make your own breaks and success. There are good jobs available in good times and bad if you look hard enough for them. If someone wants to stay more in the masses that is fine. They might be in a job with fewer hours worked and less stress coupled with more family time or time to do other things like biking. Money should not be the only consideration of a job. But you can't normally have regular hours and a job with lower stress and make a lot of money.

Personally I want a job where I am compensated for my performance.

Unfortunately, I am a spender. I made decent money for most of my life, but when I hit a retirement age I did not have near enough money to retire. I started working for myself and worked a ridiculous number of hours, but I saved enough to never worry about money for retirement. I still work though. A lot of people would not have wanted to commit the time to working that I did, and probably would have lived better lives in many ways during those years.

Life has many trade offs. Everyone needs to figure out the things that are most important in life to them. The problem is we are such a country of consumers that it is harder for people to save. We buy so many things that are not needed I am as bad as anyone in this regard.

We need to gravitate towards the more traditional European lifestyle of buying fewer things, but quality items that are passed down from generation to generation. I don't see it happening though. Probably not happening as much anymore in Europe either.

Jeff

Yeah buddy.
I'm talking about the trickle down effect.
Supply side economics, whatever you want to call it.
Make it fair for everybody.
I'm not talking about handouts.

[saab2000]

Originally Posted by Big Dan

Yeah buddy.
I'm talking about the trickle down effect.
Supply side economics, whatever you want to call it.
Make it fair for everybody.
I'm not talking about handouts.

To improve prosperity we need to improve education; all kinds of education. And we need to teach basic finance in high school. It should be mandatory.

I'm not a member of any political movement or party so take what I'm going to say at face value and don't ascribe it to any leanings I may or may not have.

People need to make better choices. I've been out of college since 1990 and have never been without work. Why? Because I'll do any work. There are jobs, in good times and bad. Some of it requires odd hours. Most of requires passing a drug test. Some of it is crappy work. But it is there and allowed me to always pay my rent and save. I haven't always worked for a major airline making good money. Far from it.

I don't waste it on video games and cable TV and cruises and other stuff I can't afford when I don't have the money. I'll spend it when I have it. But my basic needs have always been met because I made the choices to make that happen and avoided the choices that would destroy opportunities.

We, as a society, will make better decisions about our lives if we have better education and financial education is a part of that. People do need to take some responsibility for their own situations. My nephew is working hard in high school and plans his college education in such a way that he'll finish with very little or zero debt. It can be done. It just takes discipline and good decision making skills. Yes, I understand that millions of Americans have no guidance from parents or elders who care. They are at a true disadvantage.

[earlfoss]

Originally Posted by saab2000

To improve prosperity we need to improve education; all kinds of education. And we need to teach basic finance in high school. It should be mandatory.

I'm not a member of any political movement or party so take what I'm going to say at face value and don't ascribe it to any leanings I may or may not have.

People need to make better choices. I've been out of college since 1990 and have never been without work. Why? Because I'll do any work. There are jobs, in good times and bad. Some of it requires odd hours. Most of requires passing a drug test. Some of it is crappy work. But it is there and allowed me to always pay my rent and save. I haven't always worked for a major airline making good money. Far from it.

I don't waste it on video games and cable TV and cruises and other stuff I can't afford when I don't have the money. I'll spend it when I have it. But my basic needs have always been met because I made the choices to make that happen and avoided the choices that would destroy opportunities.

We, as a society, will make better decisions about our lives if we have better education and financial education is a part of that. People do need to take some responsibility for their own situations. My nephew is working hard in high school and plans his college education in such a way that he'll finish with very little or zero debt. It can be done. It just takes discipline and good decision making skills. Yes, I understand that millions of Americans have no guidance from parents or elders who care. They are at a true disadvantage.

There are entire industries that would collapse if people became financially aware and responsible!

I'm all for it though. I wish I had some education like this when I was young. Took me until I was in college to truly learn on my own.

[saab2000]

Originally Posted by earlfoss

There are entire industries that would collapse if people became financially aware and responsible!

I'm all for it though. I wish I had some education like this when I was young. Took me until I was in college to truly learn on my own.

And the world would be a better place if those industries collapsed. And speaking of learning this stuff, I've been trying to enlighten people on just basics of saving (like automating it each month, even if it's 1%) and the value of time WRT compounding interest.

I got religion on this way after college and I've been extremely aggressive over the past 12 years or so. I probably first got clarity on this as I approached 40 years of age. Catching up has been a struggle, but I am on track at the moment after reading hundreds of articles on retirement savings and the financial world and acting on that informal education.

[cachagua]

We need to gravitate towards [a] lifestyle of buying fewer things, but quality items that are passed down from generation to generation...

There are entire industries that would collapse if we did this, too.

Not that I'm saying it's a bad idea; I tend to make my purchasing choices on this basis. But if everybody began to, all of a sudden, the consequences would make 2008 look like nothing.

Microelectronics, just to start with: it's foundational to that entire industry that everything it produces gets thrown away within a year. A great business strategy, but the greatness ends there.

But maybe, once the newness wore off, the world would be a better place...

[jlwdm]

Originally Posted by saab2000

...

We, as a society, will make better decisions about our lives if we have better education and financial education is a part of that...

My parents grew up in the depression and were very frugal. One house for over 50 years, the most basic cars and few possessions. It was important to them that my sisters and I went to college because they did not have that opportunity.

I majored in accounting but still was not very financially responsible. Maybe a reaction to how frugal my parents were.

Jeff

[echappist]

Originally Posted by saab2000

To improve prosperity we need to improve education; all kinds of education. And we need to teach basic finance in high school. It should be mandatory.

I'm not a member of any political movement or party so take what I'm going to say at face value and don't ascribe it to any leanings I may or may not have.

People need to make better choices. I've been out of college since 1990 and have never been without work. Why? Because I'll do any work. There are jobs, in good times and bad. Some of it requires odd hours. Most of requires passing a drug test. Some of it is crappy work. But it is there and allowed me to always pay my rent and save. I haven't always worked for a major airline making good money. Far from it.

I don't waste it on video games and cable TV and cruises and other stuff I can't afford when I don't have the money. I'll spend it when I have it. But my basic needs have always been met because I made the choices to make that happen and avoided the choices that would destroy opportunities.

We, as a society, will make better decisions about our lives if we have better education and financial education is a part of that. People do need to take some responsibility for their own situations. My nephew is working hard in high school and plans his college education in such a way that he'll finish with very little or zero debt. It can be done. It just takes discipline and good decision making skills. Yes, I understand that millions of Americans have no guidance from parents or elders who care. They are at a true disadvantage.

agreed on all of this. we should look toward Germany on how a capitalistic society should be run. Technical education is not frowned upon there, and skilled labor jobs are plentiful. Laborers are looked upon as assets: people to be trained in order to produce value-added products. Unlike the U.S., where "shareholder" value has become the predominant focus of how a company operates, labor actually gets seats in the board room.

As another poster wrote, no one wants handouts, but we should also not settle for a 90:10 split between profits going toward shareholders: profit to employees and call it good. Things are rarely tenable on the extremes, a more fair distribution of profits (viz. increase in wages, cf. share buybacks and increased dividends) may have greater social good in the long term.

as an aside and anecdote, it was said that the Aldi brothers are some of the most miserly German industrialists; however, even Aldi treat their employees better than most American companies do

Originally Posted by earlfoss

There are entire industries that would collapse if people became financially aware and responsible!

I'm all for it though. I wish I had some education like this when I was young. Took me until I was in college to truly learn on my own.

yep, cough cough, Edward Jones, cough cough, taking 1% fees under management...

that whole tranche of companies basically fit the Upton Sinclair quote that [i]t is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

[echappist]

Originally Posted by cfox

Household debt-to-income is the lowest it's been since 2002. The unemployment rate is at multi-decade lows. Of course the wealth gap is growing, it always will as long as it's legal to earn interest, but to assert that a rising stock market and growing economy don't in any way benefit "the masses", is absurd. It is a talking point for politicians, not actual analysis. I'm not saying you have asserted that, but others here have.

Originally Posted by cfox

Much larger than it would be if the market were falling. Talk about irrelevant. I get the sense that actual adults here have the notion that if everyone can't benefit equally, then no one should benefit at all. Life is not kindegarten. Being poor sucks in a lot of ways, I know because that's how I grew up.

Your original post states "but to assert that a rising stock market and growing economy don't in any way benefit "the masses", is absurd"; emphases added. In your response to my post, you wrote "I get the sense that actual adults here have the notion that if everyone can't benefit equally, then no one should benefit at all"; emphases added.

It doesn't take a debate champ or a future jurist to realize that you made your own points hard to defend, because a) your statements are based on absolutes, with no room for any secondary considerations, and because b) your characterization of what others said/posted are exaggerations of what others have written (as in, strawman arguments).

Re: your original post (the one re: absurdity that the masses don't benefit from rise in the stock market), I doubt anyone (at least not I) is making that statement. It's always a matter of degree, rather than a matter of binary yes/no. I acknowledged in my response that the median person (which is as close to definition of average joe as possible, thus representative of "the masses") near retirement has probably $100k in his/her portfolio, and based on the common assumption that portfolio at that age should be 40% equity, I stated that this person has ~$40k worth of exposure to stocks. To further give you the benefit of the doubt, I made the assumption that the entire $100k is in equity, and showed just how little that is, as it's the equivalent of 5 years of maximum 401k contribution. Difference here being the median person took 35 years to accumulate that much exposure to the equity market (with the help of capital gain).

Furthermore, and here's the kicker, the amount of exposure goes up quite a bit for the upper middle class. Again, looking at age 60-65, where wealth does not include home equity. Asset for the 80th tile is ~7x that at median, and asset for the 90th tile is ~15x that at median. Of course the median person still benefits from gains in the stock market, but the amount of gain is minimal, by an order of magnitude, when compared to the 90th tile (see chart below). Once again, remember that wealth at 60-64 is the highest amongst all populations, and median person at a younger age would have even less in stock.

As for what you wrote in your response to my post, if you want to put words in my mouth, you should at least be honest about it and say that you are distorting my position. No one here (and certainly not I) have argued that if things can't be equal, then it shouldn't be done. Such a notion is so laughably extreme as not to deserve any consideration on its merits. Again, no one is saying that people shouldn't benefit from capital gains and dividends, but there should be considerations as to whether the whole mantra of "maximizing shareholder value" should be held as unquestioned truth. For that matter, that attitude was adopted in the U.S. only since the late 70's, so there's a perspective as to how both geographically and temporally restricted adherence to this practice is. And don't worry, those with two commas worth in stock exposure will still receive ~10x the gains when the stock go up in price, even if capital gain/dividends are reduced in favor of increased salary.

[oldpotatoe]

To improve prosperity we need to improve education; all kinds of education. And we need to teach basic finance in high school. It should be mandatory.

NO doubt about it...instead of $70BILLION MORE to an already bloated military or $80million and counting for golf outings..PLUS, 2019 is on tap for $1TRILLION added to the national debt..damn little for education..The Sec of Education..somebody 'new' that cares about this, understands the problem, isn't interested in filing the bank accounts of her special interest buddies(read-charter school lobby), should be seated NEXT to POTUS, not in the cheap seats...the priorities in the US is AFU.

[cfox]

Originally Posted by echappist

Your original post states "but to assert that a rising stock market and growing economy don't in any way benefit "the masses", is absurd"; emphases added. In your response to my post, you wrote "I get the sense that actual adults here have the notion that if everyone can't benefit equally, then no one should benefit at all"; emphases added.

It doesn't take a debate champ or a future jurist to realize that you made your own points hard to defend, because a) your statements are based on absolutes, with no room for any secondary considerations, and because b) your characterization of what others said/posted are exaggerations of what others have written (as in, strawman arguments).

Re: your original post (the one re: absurdity that the masses don't benefit from rise in the stock market), I doubt anyone (at least not I) is making that statement. It's always a matter of degree, rather than a matter of binary yes/no. I acknowledged in my response that the median person (which is as close to definition of average joe as possible, thus representative of "the masses") near retirement has probably $100k in his/her portfolio, and based on the common assumption that portfolio at that age should be 40% equity, I stated that this person has ~$40k worth of exposure to stocks. To further give you the benefit of the doubt, I made the assumption that the entire $100k is in equity, and showed just how little that is, as it's the equivalent of 5 years of maximum 401k contribution. Difference here being the median person took 35 years to accumulate that much exposure to the equity market (with the help of capital gain).

Furthermore, and here's the kicker, the amount of exposure goes up quite a bit for the upper middle class. Again, looking at age 60-65, where wealth does not include home equity. Asset for the 80th tile is ~7x that at median, and asset for the 90th tile is ~15x that at median. Of course the median person still benefits from gains in the stock market, but the amount of gain is minimal, by an order of magnitude, when compared to the 90th tile (see chart below). Once again, remember that wealth at 60-64 is the highest amongst all populations, and median person at a younger age would have even less in stock.

As for what you wrote in your response to my post, if you want to put words in my mouth, you should at least be honest about it and say that you are distorting my position. No one here (and certainly not I) have argued that if things can't be equal, then it shouldn't be done. Such a notion is so laughably extreme as not to deserve any consideration on its merits. Again, no one is saying that people shouldn't benefit from capital gains and dividends, but there should be considerations as to whether the whole mantra of "maximizing shareholder value" should be held as unquestioned truth. For that matter, that attitude was adopted in the U.S. only since the late 70's, so there's a perspective as to how both geographically and temporally restricted adherence to this practice is. And don't worry, those with two commas worth in stock exposure will still receive ~10x the gains when the stock go up in price, even if capital gain/dividends are reduced in favor of increased salary.

Hey, jeez, apologies, the highlighted (intentionally offhand) comment wasn't directed at you, more towards some of the more offhand comments made by others. You clearly have a more educated, nuanced view on this stuff. I should have been more clear.

[SPOKE]

Originally Posted by saab2000

To improve prosperity we need to improve education; all kinds of education. And we need to teach basic finance in high school. It should be mandatory.

I'm not a member of any political movement or party so take what I'm going to say at face value and don't ascribe it to any leanings I may or may not have.

People need to make better choices. I've been out of college since 1990 and have never been without work. Why? Because I'll do any work. There are jobs, in good times and bad. Some of it requires odd hours. Most of requires passing a drug test. Some of it is crappy work. But it is there and allowed me to always pay my rent and save. I haven't always worked for a major airline making good money. Far from it.

I don't waste it on video games and cable TV and cruises and other stuff I can't afford when I don't have the money. I'll spend it when I have it. But my basic needs have always been met because I made the choices to make that happen and avoided the choices that would destroy opportunities.

We, as a society, will make better decisions about our lives if we have better education and financial education is a part of that. People do need to take some responsibility for their own situations. My nephew is working hard in high school and plans his college education in such a way that he'll finish with very little or zero debt. It can be done. It just takes discipline and good decision making skills. Yes, I understand that millions of Americans have no guidance from parents or elders who care. They are at a true disadvantage.

👍.......personal responsibility. I’d really like to see much more financial education taught starting in junior high school even if it’s nothing more than beating the compounding formula into the kids heads.

[echappist]

Originally Posted by SPOKE

👍.......personal responsibility. I’d really like to see much more financial education taught starting in junior high school even if it’s nothing more than beating the compounding formula into the kids heads.

well, compounding and save at least 15% of one's paycheck

and as a continuation of @saab2000's point, we should stop telling kids at commencements to chase their dreams and follow their interests, worse, having people who survived the odds to tell kids to chase their dreams and follow their interest. While doing so in one's 20's is fine, one's gotta be realistic in one's 30s and 40s. I have a colleague in her 50s who took an almost 40% pay cut to work somewhere that pays lower, b/c the new job suits her interest better. Sure, do that if you are financially set, but i doubt she'll ever be able to retire

that said, while I begrudgingly would advocate for personal responsibility, let's not pretend that there aren't numerous hucksters out there hustling the gullible of their money...