Politics, The Economy

It is hard to see much democracy in the distribution of stock ownership. THe bottom half of the population held 1.4% of total stock in 2001, with an average portfolio of just over $3,000. And since only a minority of bottom-half households own any stock, that average is deceptively high. … If you sort households by their stockholdings (excluding pension), you find that the richest 1% of stockholders own over half the stock held by individuals; the bottom 80%, under 2%. Adding pension accounts makes these figures only slightly less lopsided…[47.7% with pensions figured in, 53.2% without].

– Doug Henwood in After the New Economy (pp. 122-124)

In the 90s quitting your job and becoming a day trader seemed like a reasonable career path to many people. I’m not sure why. While long term investment in the stock market, say via a mutual fund, might be a reasonable investment choice for some people, almost nobody is able to beat the market.” Not without insider information that is. While some people might be able to make money day trading in a bubble economy, over the long run they are as bound to loose as a gambler in Atlantic City. At best, they might do as well as the market — which is about how well most mutual funds do. So why bother?

Here are the numbers from two recent studies: