The Wall Street Ride
Nov 15, 2013, 2:21 PM
At the gym recently, the TV in front of my elliptical was on Fox. Not my first choice, but there you are. The subject was the economy and Steve Moore of the Wall Street Journal was the “expert” guest. There was some discussion about health care and then the run up of the stock market. The anchor asked Steve if it was a good thing for everybody, or just “the 1 percent.” Steve responded that it was good for everybody because “everybody is invested in the stock market through their retirement plans.”
That’s bull and Steve either knows it and is ignoring the facts, or doesn’t know and so shouldn’t be working for the Wall Street Journal and have access to the Journal’s 2.4 million readers and Fox’s 1.4 million viewers.
The fact is that 32 percent of American households have no stake in the stock market. (That figure is from the Investment Company Institute’s 2013 Investment Company Fact Book.)
Given Steve’s background, I’m sure he does know that, but he’s on Fox, he’s on the Journal’s editorial board and has an axe to grind, so he overstated his case. Why? If you turn that figure around, more than two thirds of American households do have a stake in the market. I think saying, “68 percent of Americans do have a stake in the market through their retirement plans” is a pretty powerful argument. Not as powerful as “everybody” but at least it’s true.
Steve probably knows this, too. The amount of investment wealth held by most of those 68 percent of American families is tiny. In 2010, the average household net worth of the top 1 percent was $16,439,400. Half of that amount was in the form of investments. For the bottom 90 percent of Americans, only 12 percent of their wealth is in investments. (Read more about it in a study from the University of California at Santa Cruz.)
So yes, all the record highs we’ve seen in the Dow and the S&P 500 are good for most Americans, but they are a lot better for a select few Americans.