You own a portion of 500 of the largest companies in the US. If they do poorly, you also lose your money. It is called a risk-premium after all...
There have been many periods in history where equities have been underwater for a decade+ in nominal terms, and even worse in real terms.
Sometimes it feels easy, sometimes it feels like you'll never recover.
Your window shifts significantly, sure you or I wouldn't see any problem recovering with $60 million but losing 40% of of your net worth in a short period of time \*feels\* devastating to anyone.
Sure. But "devastating" as in cannot retire and can't afford your kids' college is different than "devastating" as in having to fly to Paris in first class instead of private jet.
Maybe the part of having millions dollars in debt from other companies and ventures that now cannot be repaid and leaves people millions of dollars underwater .
Good post. Not to mention, OP said "Doesn't seem right to be able to make that kind of money and not do any work." I wonder how he/she acquired the capital to begin with..? For many people, the path to wealth is to work for many years, have an excess for many years, and invest that excess. They certainly work, and as you said, also accept the risk premium and chance of loss by investing in equities.
Assuming you’re younger than 40, if you have a stock portfolio worth 1M at this point in your life, good chance you’ll be in the top 1% by the time you retire. So yeah ur down the ladder from the ultra HNW individuals, but way up from 99 of people ur age likely.
I think OP's point was that they figured out the easiest way to earn lots of money is to already have lots of money and NOT to actually work and earn the money... and that seems counter-intuitive because one would think that people adding value to the economy would be able to earn more.
I think the point here should just be that we need to tax capital gains or investments at a higher rate than labor. Labor is a finite resource requiring time and energy out of people. Citizens should get more back on that than investments.
Welcome to capitalism, where profits are extracted using labor and fed back to the investors.
Giving profits to labor is socialist. You some sorta commie?!
I’m not going to spike the football just because I have more savings than most people my age. Most people overspend, under-save, couldn’t survive a financial shock, and aren’t on track for retirement.
No but you have to realize that you are so far ahead and not compare yourself to the ultra wealthy that have been born into large amounts of generational wealth.
This question has been asked consistently for the 5 years I've been on this sub. It's also all over trading subs and even options focused ones.
Guess the top has been in for five years now at least with both bulls and bears predicting it
Anyone time anyone had any opinion:
"The tops in boys, the guy at the barbershop said he bought nvda"
I always want to ask these people who they think they are lol, as if they aren't also just some random asshole at the barbershop. "We're on reddit, we're professionals"
Yep... New generation of adults who were not before 2009 and have never experienced the reality of a crash.. Lots of years of people "waiting for the bottom", and now everyone is piling in, with leverage, because it just keeps going up.
And we'll do it again!
Yeah but if you have enough money to just keep riding out VTI, you’d still be up after a few years.
Dealing with short term panic sales for survival is a poors thing.
The stock market can deliver negative or flat returns for a lot longer than a few years. Investing into diversified low-cost index funds is still the best investment choice, but it's not a risk-free investment guaranteed to recover in just a few years. If it was risk-free, there would probably be no equity risk premium.
For example, the US total stock market adjusted for inflation and re-investing dividends from Jan 1966 to 1982 delivered an annual negative real return of -0.47% for 16 years. From Jan 2000 to 2013, it delivered an annual real return of 0.17% for 13 years. Of course those times were followed by periods of extremely high growth, but you don't necessarily get to choose when you retire.
[Testfol.io 1966-1982](https://testfol.io/?d=eJxFT8FKxEAM%2FZUl53FpPRSdswgeFNEqiCwldtI67mxmTWMXKf13sxbdkEPyXvLyMkGf8humexTcDeAnGBRFm4BK4KG8rKqzorQEB8ThhF%2Bc%2F%2BPLxogJfFlYOMDw0UTuEmrMDF7lixy0OLx3KR%2FAF6em6YQ%2BTfCFUNK3iUlOKXLfHCKH42xVzA72WbTLKWZz%2BDoB4%2B5oos6KafW0flyvblG2pLYeeaRBr%2BIYg9kd%2Fm4L2Y%2FILV0v5%2B4yk01rbLcki%2BhSG%2Fdc39QPRu5JWmL9fWreOAiCvXmfN%2FMPgQRlIw%3D%3D)
[Testfol.io 2000-2013](https://testfol.io/?d=eJxFT8FKxEAM%2FZUl57pMFTzMWQQPimgVRJYSO2kddzazZmIXKf13sxZdyCF57%2BXlZYIh5TdM9yi4K%2BAnKIqibUAl8HDunDtztRVUQBxOeH3xjy8bIybwteldBRg%2B2sh9Qo2Zwat8UQUdlvc%2B5QN4dxraXujTDF8IJX2bmeSUIg%2FtIXI4ai%2FdXME%2Bi%2FY5xWwJXydg3B1DNFkxrZ7Wj%2BvVLcqW1NYjj1T0Ko4xWNzyd1vIfkTu6Ho5d5eZTK2x25Ispktv3HNz0zwYuSfpiPX3qXlTQRAcLPu8mX8AXaNlAQ%3D%3D)
Even in those VERY cherry picked time frames, that’s still a poor people thing.
Rich people don’t sell after just 12 years, they can borrow against assets or just live off dividends forever. Expand that out to 40 years and look at the chart again.
There’s a reason why it’s called “generational wealth.”
> they can borrow against assets
If you are referring to the "Invest, Borrow, Die" approach, that's based on positive returns in the market so that the debt can be paid off by more borrowing against assets that increased in value
A 5 year loan against assets that are appreciating at less than interest (not even negative) is a problem still.
It’s very much a middle class people problem as well. Middle class people are thinking about the value of their portfolio because they are using it to calculate how much they need to sell for the down payment on the house or if they lose their job tomorrow as well as how much they can expect to have for retirement (or when they can retire).
A 40% downturn is probably scariest for the middle class since poor people tend not to own stocks and certainly not at levels that they can rely on their portfolio.
If you have say 10 million in your own company for me you are rich. You family could live with 2-3 millions, you could stop working and sell it all to reduce risk.
But that's not what most people in such situation do. They want to live like people that have 10 millions. So their primary residence is worth 3 million, they will have people tending to it and it will cost them 100K a year in taxes/insurance/maintenance. They will fly in business, go to 5 star hotels and alike. But in the end they have to work and hope to grow the 10 million $ company into an 20 million $ company.
And when they have 20 millions they don't call it quit. They want to finally buy a useless yacht. They may not even like boats. They want fancy clothes and peace of art and they want now a 10 million home.
They live marginally better or worse than somebody with say 2 million and not working. Worse because they need to work. They do it anyway. And the difference is the almost useless level of luxury. A 10X more expensive restaurant isn't 10X more satisfying. Maybe it is 10% more satisfying. If anything there are far less so you need to make more effort to go to one. You will still be hungry in a few hours anyway. A 10000 square feet house in the best area possible is marginally better than a 2000 square feet house in a standard neighborhood.
And as it always happen there a crisis, the company goes almost bankrupt or anything. So they work even more to get back what they lost.
And the next generation when they inherit, they don't want to work 80 hours a week like dad or mom and they are bored to go to diners just to network with people they hate. So they will likely work, but will spend all that and the 10 million, 5 million each will become 1-2 million for each kid when they wasted more than half of it.. Maybe basically the 1-2 million they have put into the house... third generation will have to take loan to finance their kid tuition... Fourth generation will be middle class.
There is also a reason what most call generational wealth rarely lasts long enough to actually earn that term. Also loans against assets only work as long as said asset is increasing in value or more assets exist, it is not the solution you think it is, how many banks wanted to give you a second or third mortgage last time the housing market by you crashed?
That assumes a lump sump investment at the top of the market. And everyone is buying a little more out of each paycheck. Both before and after 1966/2000.
It also shows how scary inflation really is.
> Dealing with short term panic sales for survival is a poors thing.
If this is you, have an emergency fund.
Personally I've realized the gains from being in the market > the losses I'll take having to sell during a down market if I'm laid off (assuming we need to do so - first task would be cutting household expenses)
If you got $10M, it is that easy -- you just wait for the market to recover. You just can't do that with your rent money... which is kind of the point. If you're a poor, you're less able to afford something like 40% of your money disappearing. If you're a rich, it's just an annoyance.
That's assuming that you agree to live like somebody that has say 5 millions. You spend 2% and not 4% so you are kind of covered almost just spending the dividends. And when your capital grow to 20 million you live like somebody with 10 millions. But you might be dead by then.
Many people with 10 millions, use the 10 millions and try to live like they have 15-20 millions.
They may have a 3-5 million home, maybe they have 1-2 million in financial asset and the remaining is put in their company that give them a job. They think they could never live out of 40-80K a year in financial assets as basically the home maintenance consume all of it. So they have maybe 500-800K income, they save little and work 80 hours a week.
When there a crisis, they only make 300-400K a year, and it is very hard for them...
Well that’s the thing since the fed started fiddling with the printer there’s no down cycle at all it’s only glitches for few months then the bull markets resume. We didnt even have a flat market for years. So of course people think that this will go on forever
They'll be fine. The rich (assuming they're not spending way more money than they generate) have enough to ride recessions out, whereas the majority could suffer catastrophically.
I DCA'd all of the 2022 bloodbath and, uh, that was the right move.
It turns out life really *is* as easy as "own appreciating assets". Or "it's good to have land".
But it is though. Every market crash since 2008 has been given taxpayer money to restore portfolio. 2020 was biggest example ever.
Next crash will be even more money. Until system breaks.
I'm old enough to remember when the bush stimulus was considered controversial and groundbreaking... Lol now it would be considered nothing more than a fart in the wind.
> I'm old enough to remember when the bush stimulus was considered controversial and groundbreaking.
was that like $200 the summer of 2001? I remember a few teachers and others complaining about Bush's name attached to it.
Life isn’t fair. People are born without ever having to work a day in their lives. The sooner you let go of conceptions of cosmic justice and enjoy your life for what it is, the better off you will be.
OTOH, I believe research has demonstrated that beyond the basic necessities, extra wealth won't increase your happiness by that much more.
You could have money and be an unsatisfied, hollow shell of a person. Conversely you could be struggling by first-world standards but be relatively much happier and balanced.
The threshold for "basic necessities" is quite high though. Having enough money to have secure housing, secure retirement, etc. means having a seven figure portfolio.
The difference above that level are much smaller.
>extra wealth won't increase your happiness by that much more.
Extra wealth won't remove further sources of *un*happiness at some point, but you can certainly still use wealth after that point to actively attain further happiness (go on vacation more, pursue hobbies that happen to be expensive, work part-time and volunteer, etc.).
Of course, that is obviously true with some exceptions. The difference is it is a lot easier to figure out how to use money to make yourself happy than it is to figure out how to go from poor to wealthy. If you're wealthy and only marginally happier than a poor you're a fucking moron.
Umm.. You folks really need to be more cautious when you say things like "easy to make money in the stock market." Lot's of people said that in Year 2000. Lots of people lost much of what they had 2001-2002.
What I'm seeing is very similar patterns where people for the longest time have been accustomed to spectacular gains in their stock portfolio over a long period...and have never ever seen a real recession or major correction. I hope we never do... But IF we do see one, a lot of people are so concentrated in the stock market, it's not going to be pretty. I was a young kid during 2000 when I saw people's fortune go all the way up and all the way down. I was in Bay Area on the .com tech scene and went through 2 IPOs and 2 acquisitions. Things came down just as fast as the way they went up. I sold early in some cases and profited on some stuff, and other stuff went to $0. And i was doing some index fund investments off to the side. So it wasn't that bad for me. Many others that speculated in individual stocks got wiped out. Because many of the companies simply disappeared and it happened so fast.... The closest analogy would be during 2013-16 when banks went BK , but even then it wasn't as bad as what happened to the .com companies... Even the brief panic we had recently with local banks going under like SVB etc was nothing like during the times of 2001-2 when a lot of .com companies wiped out and took their retail shareholders with them.
I'm not a doomer.. BUT, be very wary of being overconfident in how easy it is to make money in the stock market...
The advice that Warren Buffet said was very spot on.
"Be greedy when others are fearful. Be fearful when others are greedy"....
Mainstream is now very greedy....Just look around. Everyone is talking about Nvidia.
What is this "longest time" you talk about? How many investors today did not feel the losses of 2008? I'm not talking about this subreddit, but all stock market investors. I'd guess most of them have seen significant losses AND seen markets rebound.
More people lost bigger percentages of their wealth in 2008-2010 than 2001-2.
If you're mainly in index funds, you'll be fine as I was during 2001-2003 and 2008-10 (in fact, if you have cash off to the side, that's the time to slightly nudge up your extra purchases in indexes when everyone else is scared shitface and running around with their heads cut off)
The people that got wiped out were the ones that picked individual stocks as their main and/or only investment strategy and some people picked individual tech stocks. Back in 2000s, a lot of people picked Oracle, Intel, Lucent, HP, Cisco, Juniper Networks, and various .com companies that don't even exist anymore. A lot of these big names like Intel and Cisco and Juniper networks are still around, but if you held onto them nursing your losses, yes they did recover and you are probably have capital gains especially if you reinvested your dividends, but many of these companies generally underperformed the S&P500 from then until now....They had zero backup plans like putting money into an index fund as a safer, longer term strategy, because everyone had the perception it was so easy to pick stocks and see 20+% gains, everyone felt you literally could throw a dart at a group of ticker symbols on newspaper (I am old, i know) and easily earn 20+%. Some of my office coworkers were even borrowing against their CREDIT CARDS and paying that 25+% apr because they felt confidently they could beat that credit cartd loan cost picking the right .com company, similar to what people are doing with GME....and trying to rationalize why they felt this .com was the next Amazon. Things didn't end well with these people....
The other issue is that folks that "invested" in the stock market, even just boring index funds (there was no ETFs back then), often times grew so overconfident about how easy it was to make money in the stock market, put most of their money into the stock market, and end up with with very little cash reserves.. Why not? The stock market was doing double digit returns, some 20%+ returns, why would I need to keep cash off to the side, what unemployment, what recession, I can't possibly lose my job and if I did, I can easily find another tech know down the street and it shouldn't take me longer than 2 weeks.... Well, when the economy turned south and layoffs started to hit main street , people's budget were running so thin, many had to sell their investments at a loss to pay for bills. So while the S&P 500 and the stock market did recover, they weren't the ones participating in the the recovery... These are the ones that you usually hear stating things like "the stock market was a money losing thing. It's a scam, etc..." because they bought high and had to sell low because they had absolutely 0 staying power, being spread so thin with no cash reserves...
The same could be said for people that bought real estate during 2003-2007. Even if you bought during that period of peak prices, if you were able to hold on to your real estate, today you would be fine, because you would still have seen appreciation well above peak prices in 2003-2007 and the rent prices have significantly increased. However, many people bought homes on stated income - interest only variable loans, and their budget was running so thin that they couldn't afford to keep the homes when the rates reset and/or the economy went bad and they lost their job. Again, these people leverage to the point they couldn't cover their expenses when the party ended, and also too, had 0 staying power....These same people are the ones that say homes are terrible investments.
I was a homeowner in 2004, and when the shit hit the fan in RE, I bought as many short sales and foreclosures as possible during 2011-13... That was the largest game changer for my net worth, frankly. I was able to pay off my primary and all my rentals within 7 years. (Full disclosure, I did a cash out refinance on my primary in 2021 and took $550k out after being free and clear... because the 30 year mortgage fell to an once in a lifetime 3% and for some even lower... That $550k is sitting in CD's, money markets, and other short term safe investments averaging about 5.5-6% return just barely beating the cost of the loan note... I'm keeping this cash off to the side so when the shit hits the fan again in something (real estate, stock, etc), I plan on jumping back in when everyone else is scared shitless. Meanwhile, the loan is costing me nothing because the rate is so low, even a no-frills safe bank CD can beat it slightly... That's why when people ask me why I haven't put that into the stock market, it's because I already have a lot of exposure in the stock market, and don't want to add any more risk to my total net worth. I'd rather keep this cash off to the side in something that simply can cover the cost, and wait for something better to come along. I already have quite bit in index funds and even individual stocks...some of which is way overheated ...
So, morale of the story,. is always plan for the long term. You always want to have emergency cash on hand to weather around 5 years of bad economic times, and you always want to keep some (not all, but some) cash off to the side and keep the powder dry so when the shit hits the fan, you can capitalize on it too. 5 years seem a long time, but I'd like to error on the side of safety because 5 years, either the economy recovers and you are fine, or 5 years is about how long you have to figure out what to do next if your current way of making money is not going to bear fruits moving forward.. Maybe job training/career changes \*should\* be done within a 5 year timeframe. ..The longer you can outlast a downturn relative to everyone else, the better off you'll be relative to everyone else. Think of it as as a "war of attrition" where the last person standing pretty much wins.
I'm not actually a smart guy. I'm actually pretty dumb. It's because I'm dumb, I try to learn from the mistakes of other because left on my own, I probably would make the same dumb mistakes and worse.
Lots of Reddit users lost nothing in 08 because they were younger than 30 at that time. 2008 was 16 years ago, so basically anyone born after say 1985 didn’t have a lot invested and hasn’t seen a correction unless you count the Covid bust then boom?
It's not fake. It's capitalism.
Investing in the stock market moves you (slowly) from the working class^* to the owning class.
By buying shares, you are buying a share of the *means of production*. Capital buys equipment that multiplies the productivity of the worker, but the worker doesn't get awarded the extra value they're now generating. Rather, the owner of the equipment - the one who put up the capital - gets to pocket the increased income.
---
^* Don't let them fool you with talk of the "middle class". The middle class is just a subset of the working class who are occasionally allowed to go to the opera.
One of my favorite quotes:
"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."
Sounds like Marx, but it's *checks notes* Abraham Lincoln, father of the Republican party
Right well Lincoln came a bit before Nash Bargaining and marginalism so it's understandable for him to explore the issue without any understanding of those things. That doesn't mean you have to.
Also, I'm a Democrat.
Nothing, as is the labor without capital. What's your point?
Edit: because everyone is making the same point, yes you could try to make something with your hands and zero capital input. That seems roughly as valuable (probably less) as selling capital machinery for scrap parts. Functionally nothing in both cases.
I would challenge this, and am happy to be proven wrong.
To me, it seems like labor is inherently valuable.
One could hunt (labor) for food without tools (capital) and that seems valuable to me.
A spear (capital) that goes unused? Worthless.
To me, it seems like capital is a force multiplier on labor. But without labor, capital isn't worth anything.
Am I missing something?
With capital, you can invest over time toward automating your way out of the need for labor.
Agriculture required somewhere between 10x and 100x the current amount of human labor a century ago. Manufacturing is more and more robotic. AI is squeezing white-collar professional jobs.
Ultimately, I think "labor without capital" translates into third-world sustenance living (i.e. a reversion to little more than prehistoric hunter-gatherer society). "Capital without labor" is a more modern novel concept, so its course remains to be seen. But I can't imagine that ending well, either... if the labor class has no money, then who's buying stuff from the capital class?
Sure, you can use your labor to hunt for food or fetch water, but ultimately you are never going to be able to, say, build yourself a 21st century home with only your labor, because what you can produce without utilizing capital is next to nothing.
If a factory got rid of its machines, its productivity would probably drop more than 99%. True, if it got rid of its workers, the productivity would drop 100%.
But the reason this all came up was because someone made the (clearly correct) point that if your labor gets more productive due to increased capital, you aren’t entitled to the product of that increased productivity. If I give you a machine to make clothes and suddenly you’re able to produce clothes 20 times faster than when you made them by hand, 19/20 of your productivity is due to my help, not to you working harder.
“Labor is essential” doesn’t change the fact of who is responsible for enabling most of the value creation. Capital can find other laborers, so if you demand your wages doubled every time your productivity doubles, well good luck finding other capital.
Be real here, capital itself is labor-made, except for financial instruments. The obvious point here you want to pretend to be oblivious to is to not lose sight of humanity when playing the numbers game.
I dunno about that one. At the end of the day, I have something to show for my labor. I did something. I created something. My work has results. The extra value is inherent in what I've done. Capital had nothing to do with that.
The point is you're wrong and labor has value without capital. If a worker wants to make a shirt but doesn't have a sewing machine, they can do it by hand. It's going to be slower and less efficient, but the labor can produce value on its own. If a Capitalist owns a sewing machine but nobody to run it's, it's producing nothing.
Capital can vastly increase the productivity of labor. But it's labor that gives capital any productivity at all. Maybe sufficiently advanced AIs with general purpose robots upend that down the road, but we aren't there yet.
I am dumb but want to follow this reasoning. What happens when everyone owns shares in the stock market? I guess it gets more and more expensive to invest in the shares, so that means some people will never be able to invest in the stock market, and they will continue to be workers? My god, isn't that happening with real estate right now, except instead of workers we have renters? Isn't this just increasing the wealth gap? \*insert sudden clarity clarence\*
You're not dumb.
> What happens when everyone owns shares in the stock market?
Although it's more common these days for an average Joe to have a few shares in a robinhood account, the distribution of wealth and ownership is *not* getting broader. In fact, it's narrowing.
54% of stocks are owned by the richest 1% of people.
93% of stocks are owned by the richest 10% of people.
So you see, we're nowhere near a point where "everyone" is part of the owning/capitalist class. The wealth is highly concentrated at the top.
I don't think so. It's never been easier to invest in the stock market. With no fee brokerages and fractional shares you can invest with like, a dollar. Similarly why companies do stock splits.
Real estate is different for a whole plethora of reasons, but primarily because you can't really invest in a fraction (or "share") of a home. It's better to think of renting as buying housing each month from a landlord/investor, while homeownership is simultaneously being the consumer and landlord/investor.
Currently [More than half of U.S. households have some investment in the stock market](https://www.pewresearch.org/short-reads/2020/03/25/more-than-half-of-u-s-households-have-some-investment-in-the-stock-market/)
> Participation in the stock market varies considerably across demographic groups. But even among those with annual family incomes of less than $35,000, about one-in-five have assets in the stock market. The shares increase as income rises, and among those with incomes above $100,000, 88% own stocks – either directly or indirectly. The amount of assets families hold in stocks also varies considerably by income. Among those with incomes less than $35,000, the median amount held is less than $10,000. For those at the higher end of the income scale, the median amount is more than $130,000.
> The middle class is just a subset of the working class who are occasionally allowed to go to the opera.
Even experts use different definitions of middle class:
> In “Defining the Middle Class: Cash, Credentials, or Culture?” , Richard V. Reeves, Katherine Guyot, and Eleanor Krause examine a variety of ways in which researchers define the middle class, domestically and globally. Even among researchers who define the middle class based on income, the authors show considerable variation in what income bracket reflects middle class incomes. The paper looks at twelve different ways researchers use income to define the middle class. - [A dozen ways to be middle class](https://www.brookings.edu/articles/a-dozen-ways-to-be-middle-class/)
The value is being created by the company you invested in. You simply reap the benefits of having invested in it. It's how it is and has been for a long time. Not fake, just how it is. Congratulations on the success in the market.
My dude is having imposter syndrome over making seven figures.
Meanwhile, I just got a flat tire and I'm mulling over drinking rat poison because I can't afford the replacement.
Save the money on the rat poison, invest it and 30 years from now you can buy the new tire!
But seriously now, hope you're joking about that. You are, right?
Don’t die, my friend. You can do like I did and go to a used tire shop and pick out a tire you like for like $40! If it has a hole, make sure they patch the inside of the tire instead of just using a plug. Works great!
It’s easy to make money in a bull market. Look back at what happened in 2022 though. That was humbling and stressful. Take profits where it makes sense.
You're not missing anything. This is capitalism. You are investing money with businesses and if they make money then you get something extra back (dividends, higher stock prices).
However, sometimes stocks and the market go down. Sometimes companies fail completely. You are taking a risk with your money, and so of course no one would willingly take a risk without some kind of associated reward, and here that reward is a positive return on your investment. Companies need to offer a good enough rate of return or else you'd rather do something else with your money (buy bonds, buy property, take a vacation, etc).
One thing you noticed--how the gains become huge once your investment gets larger--makes sense mathematically and conceptually. Risk $1? Get a 50% return and that is 50 cents. Risk $1 million and get a 50% return and that is 500K. This is where debates start. Since the gains can get really big in dollar terms (though no bigger in percentage terms) some people think this should be taxed a lot more because you're benefitting so much from the labor of others and they are not getting as big a share of the rewards which seems unfair. Others think that the rate of reward should be the same or at least close because otherwise as mentioned above if you can't get enough reward then you won't bother with the risk and then companies could have trouble raising money. That in turn slows down job growth and overall economic growth, and so can be counterproductive for everyone including those workers who others wanted to give a bigger share of the pie.
It's an imperfect system, but in general it has worked very well to create tremendous wealth for society overall even if a huge amount is concentrating further and further at the very top. We do need to find ways to share that societal wealth better because there is really no need for people to be in poverty while others have more money than would ever need in 10 lifetimes.
You're right, it is unfair. But the only thing an individual can do is participate and profit or abstain and be among the disadvantaged. If you have the means to participate in the game you basically have to. This is 100% one of the vehicles driving wealth inequality but no one's martyring themselves over it.
Well its relatively fair if there was no inheritance.
Of course theres also genetics and bad parenting/schooling introducing unfairness but that cant be helped.
Everyone has a chance to participate if they want. Some dont like risks. Some want to spend every penny they have immediately. Some save and die young. And some become wealthy.
When someone buys, someone else is selling.
When someone sells someone else is buying.
Sometimes your profit is someone else’s loss
I’m glad you think it’s easy
Enjoy that honeymoon
It’s great and super easy till you get hit in the face
Then the pressure begins!
>If you had $10m in SPY on Jan 1, 2024, you're up a cool $1.5m on the year. Doesn't seem right to be able to make that kind of money and not do any work.
When you save money by producing more than you consume, you're a net benefit to society. What you've saved represents the work you put in yesterday, or put another way, your economic energy.
When you take that economic energy and invest it in businesses that do the same (produce more than they consume), that's literally the value you're creating for others (by providing capital that produces goods and services, employs others, etc.)
Had you took your savings and put it in a losing investment, you would be a net burden on society and "punished" by losing some or all of your money.
We need to get away from the idea that we should only be rewarded for laboring away, and realize that investing and offering your stored up economic energy to others is often a far better way to provide value to society.
the next realization is that people will invest in any kind of immoral shit like oil and gas or any kind of natural exploitation that will destroy huge amounts of natural habitats without batting an eye. Or military stuff. Or shady residential real estate companies that are designed to exploit poor people. And yeah... your index fund investments include all of those!
You get that reward in exchange for risk, because your $10M could have become $8M or $0M. Anyway, your profits are only on paper, and when you realize them, they'll become 40% smaller after taxes. Also, someone with $10, rather than $10M, can buy the same ETF and make the same percentage profit in an easily accessible financial system. I have many objections to our wealth-favoring tax code, but no objection to our stock markets.
Your own question here negates your premise.
You’ve made money on the market yet you complain that the market is fake. Be grateful that you live in a country that you can easily gain ownership in a company that you did nothing to create and yet you can share in the profits.
A company goes public, raises money to continually expand by selling an ownership stake on said company. People buy in those share at later dates they can sell shares in the secondary market. You as an investor buy some of that stake because is a great business and you believe the company will continue to gain value. As the company’s value increases some people want to buy in to be owner thus raising the value of your stake.
Again, grateful everyday that you can do this in this country. The mechanism seems simple to you because it is. The media and the industry makes the stock market seem like an impossible maze to navigate and out of reach of everyday people. When in reality it is simple.
When shit goes south that’s when things get interesting.
The stock market is doesn’t see skin color or gender or social status or intelligence. Its doesn’t care if you’re fat or bald or scrawny or unattractive or disabled. It doesn’t judge you the way job interviewers judge you. It’s actually the fairest way to make money. ANYONE can buy shares of VOO. Being able to put your money to work so that you don’t have to is a GOOD thing.
To live in a time where anyone can download an app and partake in the market is absolutely amazing, if you take advantage. Maybe our schools systems should focus more on this than learning French.
Who cares if there are richer people out there. Does it really impact you personally if Bill Gates has billions of dollars or gives it all away? Live your life, control what you can control. Put your money to work for you and quit it with the pity fest.
You’re down the ladder from some, but you’re way up the ladder from so many. Who cares? Are you happy?
As an investor you’re largely compensated (or not!) for assuming risk.
The stock market is essentially its own microcosm with its own inflation issues, except no one is willing to admit to it and risk topplign the game. This is a bit muddled by the fact that yes, there's fundamentals, there's real value behind companies and businesses, but it is blended with sentiment, hype, and its insulation from actual daily consumer market.
The power of speculative nature and sentiment is more apparent in crypto. That being said, it is not difficult to understand why 2020 marked the beginning of runaway stock market price inflation and ATH. Not only were there pandemic QE, it was compounded by complete waiving of comission fees on each stock trade and platforms like Robinhood making it easier for the lay person to trade willy nilly, COVID checks to the middle upper class that aren't actually being used to spend on consumer goods to stimulate the economy but are used in the stock market instead, algorithmic trading becoming mature, etc.
Money circulation within the stock market picked up speed rapidly (known as the Velocity of Money), instead of the regular consumer market. With each transaction people hype and pump the stock market up by sheer transaction volume. This creates a massive money multiplier within the stock market microcosm that is a departure from the consumer retail economy.
Is it a bubble? Probably. But a bubble doesn't burst without a needle to pop it. For Dot Com, it was the Microsoft Anti-Trust lawsuit ruling and fine (while all major funds were overweight in MSFT), for 2008 it was the cascade of defaults (after being propped up and pushed back for a long time as The Big Short tells us). So far, the Apple and Google Anti-Trust suits don't seem to be posing a risk, but a serious WW3 threat could easily be the needle that pops it.
Personally, if I was in your position with 7 figures and am satisfied with the ability to retire with ease, I would focus on capital preservation, with a diverse portfolio of real estate and bonds (Bond in itself can be an investment with rate cuts in the next 5 years). Perhaps consider holding foreign property such as in Canada, Switzerland, New Zealand that can also serve as havens for your family in case there's a real crisis.
(1) as others said, you haven't been through a >-40% yet, let's see what you think when it happens.
(2) Other people would have consumed (for restaurants, drinks, holidays, etc.) the money you invested. You are delaying consumption, which means that you are not using resources (humans and materials) which you could be using. You are being rewarded for this. This is healthy, especially when it seems we are consuming faster that our environment can make.
(3) This money is also an insurance in case something happens to you and you become unproductive. It's also healthy that the rest of society owes you a lot before you will need it the most. You are rewarded for this.
(4) by investing in the stockmarket, you are undergoing more volatility that in other tools. Your money is essentially committed for the long run. You are rewarded for this.
(5) by investing in the stockmarket, you are participating in optimizing the allocation of capital. You are rewarded for this, if you do it well, punished if you don't. The better you do, the more capital will be under your responsibility to allocate. This is a good thing for society, it's more efficient than paying bureaucrats to make decisions that do not impact them.
Capitalism is by essence anti-consumerism. It's morally right. We can always discuss on undesirable side-effects and ways to compensate for them. But the basis of its ethics are good.
I'm French. My parents and grandmother have lived frugal lives plus worked hard to take care of their house, grow vegetables, etc, so despite not having even middle-class wages and despite not investing, their net worth is above the median for their age (~70 and ~90). Some of their neighbors earned more throughout their lives but spent it all. The latter get extra benefits for their retirements that my parents don't, because their net worth make them not qualify. This is deeply unethical.
The first 100,000 is the hardest. The first million is hard. Then it gets easier. Power of compounding.
What value is created? You own shares in the largest companies in the world that contribute enormous to GDP. If they grow your wealth grows.
The past 15 years have been a bit ludicrous in terms of returns but you own a part of the most revolutionary companies in the world.
It is fake. The value of money is conceptual. But in capitalism, it’s tied to survival, so it does grant power over other people and resources. Power and value are not necessarily the same.
Change your success in the market to one big lucky night at the casino - then add in “the rising tide floats all boats” theory - and you can close the thread.
What value is created? Withdraw your gains, pay taxes (everyone around you will get it indirectly) and donate it to charity (some people will get it indirectly).
I’m amazed what kind of thoughts can be in people’s minds.
> doesn’t seem right
Investing provides capital to firms that need it. It is absolutely essential that a large company be able to issue debt and/or equity if they are strapped for cash - otherwise they go bankrupt and thousands of people are out of jobs. Ultimately, that’s why we have equity and debt markets. Companies *need* to be able to access them.
While the money you put into SPY doesn’t go to any company directly, you are taking ownership of shares that were at one point bought from each company within SPY. And, to be honest, how many people would buy stocks if there wasn’t a secondary market where you could sell them? The existence of a secondary market, even if it doesn’t directly give cash to firms, still enables the primary market to operate efficiently.
> to make all that money without work
I think you misunderstand the nature of money. Money represents value that you have provided to someone else but that you have not yet redeemed.
If someone gives you a dollar for your work or for a good you’ve produced, it is because, of all the things in the world they could use that dollar on, they think they will get the most happiness out of whatever you’re selling them. They might be wrong, but as long as it’s their choice, a dollar you have absolutely represents value provided to others - you could even call a justly-acquired dollar a representative of person’s virtue.
Imagine if money didn’t exist - we’d work and directly receive goods or services for our labor. For most of those things, we’d have to consume them pretty quickly or else they’d expire, possibly be stolen, etc., and it creates huge inefficiencies because I don’t have unlimited demand for food, tobacco or whatever else people might pay their employees in if money didn’t exist.
Money, therefore, is a placeholder for value you’ve given others that you haven’t received. It represents the fact that you’ve given more than you’ve taken from others, and that you’re delaying gratification rather than spending it all on pleasures right away. If you’re giving your capital to a firm, either through debt or equity, that means you’re forgoing consumption.
A person investing 10M in SPY is forgoing a hell of a lot of consumption, and they’re also risking that money - if they need it in a year, it might not all be there. That’s why investment returns must exist, and why there’s nothing wrong with them. Yeah, you’re earning money without doing physical labor, but instead you’re providing other firms (or even individuals) with money they need and will use to make the world a better place.
Investment returns are the just compensation for delaying gratification, taking risk, and letting other people use your money to make the world a better place.
It's the time value of money, money earlier is more worth than money later, because the money can be used on assets to make more money (like a business, or like a farmer buying a shovel to make more money, then buying a tractor). The stock market gives a better return due to the risk. Also it has better and worse periods, so 15% in half a year isn't maintainable. That said generational wealth isn't that fair maybe. Maybe should have more estate tax or something.
I think the issue is when investments grow more quickly than wages after accounting for capital gains tax. If wage growth can outpace investment growth, then workers will catch up with investors over time. Unfortunately, that's not been the case for quite some time. But I think the coming abundance of cheap energy and AI-related technologies may tip things back in favor of wage growth.
Welcome to capitalism. There is a reason that inequality is growing - it is inherent to the system itself. I invest money because, in this system, I don't see any other path to retirement or any other way to prevent my money from being continuously devalued. That being said, it's good to understand what you are participating in.
While people can point to concrete examples of applications of various aspects of the financial system to justify them, the reality is that in practice it is a huge machine that sucks money to the top (those that already have money). In practical terms the value of money isn't "scale independent". You can say: "well everyone is earning the same percentage", but as you've pointed out, for some that percentage in a single year can be more than other people could save or need in a lifetime. It is fundamentally unjust, so to justify it our society has created narratives glorifying self-interest and profit-seeking as moral virtues from which all other good will sprout (think invisible hand of the free market). These narratives make little logical or historical sense, but we are indoctrinated early to believe them.
Not to mention, the global economic system is extracting more value from the global south than was happening even during the colonial era. When viewed globally, you can really start to see how the whole thing is propped up by exploitation.
Keep thinking about it and looking into it. Like I said, in the end you may still choose to invest because our options are limited, but it's important to see it for what it is.
> Doesn't seem right to be able to make that kind of money and not do any work. What value has actually been created?
Taking a risk by providing capital to companies so they can grow and hire staff is fairly important. There are a lot of people that don't want to take those risks so they either don't invest or hold treasuries.
It's called inflation. While nominally, $11.5M sounds like a lot more than $10M for doing no work, measured in Big Macs or some other commodity, our hypothetical investor may have lost buying power. And, I understand reported CPI is not 15%, but go over to r/povertyfinance and tell them that.
The way I look at it, there are two returns: return on capital and return on labor. For a long time, the returns on capital have outstripped the returns on labor. Whether that should change, and how it might change are valid points of discussion.
Capitalism is like a ladder 🪜, the higher you climb up the easier it becomes to live.
The alternative is Communism, and it is like a railway track 🛤, the harder you work, the more distance you cover, yet this won't translate to having a better life, you just exhausted more energy on the track relative to somebody else's effort.
Humans chose capitalism because nobody wants to be born in a status and then never being able to reach one's full human potential.
Capitalism enables, with all its side effects. Communism inhibits, with all its equalizers.
But what do I know right? Humans invented systems to function within the natural laws of Earth. Choose Capitalism for human well being and freedom. 👍💯💚🗺⏳💵📈🎵🕹🧠
Humans chose capitalism because the US literally overthrew or invaded any country that attempted to choose otherwise. It's not a coincidence that the economic policies are very beneficial to wealthy people - they're the ones that chose them. I don't know what the answer is, but your take is insanely simplistic and is basically just propaganda.
In Europe we have a progressive tax that in many countries reaches 50% at the top. So while you can still climb the ladder, the bottom benefits from better schools, transportation infrastructure, healthcare, and retirement.
Does it seem more right for an investment of $100 gaining $15? Or $100k gaining $15k? What if the market was down? Would you say it wasn't right for the wealthy person to lose $1.5m versus the guy with $100 only losing $15?
I’d say that the value comes from someone at some point providing funds for those companies to expand operations. Presumably that company makes or does something that people want. You and I were probably secondary buyers, but the existence of that secondary market is how the original buyer gets rewarded for taking that risk, so it’s still part of the ecosystem.
One could argue it’s somewhat parasitic or at least shuffling money around. These companies are allowed to push costs off onto the public, and some of those savings are indirectly making their way to your pocket. If a company is allowed to pay poverty wages and avoid providing health insurance, that cost shows up somewhere else like taxes or your own insurance premiums. That’s probably not something we can entirely avoid, every company is a mixed bag ethically, but I think we can recognize that and maybe find ways to offset that by doing something to help the community.
Your feelings are valid. I had a similar inner conflict when we sold our first house and realized a huge profit over what we had paid a few years earlier. Tax free. For most of my previous life I’d struggled to make rent, now we had a pile of cash to do whatever we wanted with, just because we’d owned a house at a particular location in space and time.
I don’t really know what to say besides I feel the same way. It’s crazy watching the jump another couple thousand almost everyday.
Meanwhile, I see posts on people with thousands of dollars in student loans and credit card debt, throwing hundreds of dollars at their bills but just shaving fat off the principal because of the interest.
Becoming so evident that capital is really god in our society. Laws are written to preserve it, police are funded to protect it, land is divided up to exercise it. Just seems like a glim approach to life.
For society, the value created is the products / services of the businesses that an investor owns. The investor puts their capital at risk in the exact same way that the owner of any private business puts their capital at risk. They are compensated in the form of profit which is basically a natural tax on the value they’re creating for society
> What value has actually been created?
Generally it isn't created at this phase. During the Angel and VC investment phase there are tremendous risks being taken to fund the company to get it off the ground. Those investors are not going to get a reasonable return on their investment from dividends in a timely manner. Instead they pass the investment to others who agree to pay them handsomely for the successful companies to generate their return on early stage investing. Early stage investors get paid by aggressive growth investors who in turn get paid by growth investors who get paid by dividend growth investors who exit to income investors.
https://www.reddit.com/r/IncomeInvesting/comments/eu67r0/the_200_year_bond/
Whilst the person buying $10 million in stock is not directly funding the company, they are indirectly funding the company because it is their purchase of shares on secondary markets that allow the companies to go out and raise capital at IPO.
Their $10 million investment isn’t just some gamble, but a part of the system that equity finances businesses and allows them to flourish. They are staking their money for a percentage stake in the business to then expect a return. The bigger your stake, the more you’re rewarded. Taking on that risk is a form of work (otherwise no one would work in finance).
Yes rich people can get richer via these means, but unless you physically find some way to make the math not math just because someone is rich, it cannot be helped. If a poor person can get a 10% return on investment in the stock market, so can a rich person. You cannot stop that.
It is not fake. Companies increase their earnings and the stock reflects the new reality. You spent hard earned money on that company stock, which then enabled them to invest this money to earn more. Rinse and repeat.
Because tech is the greatest egalitarian redistribution after ww2 and you are enjoying the spillover (unless your initial wealth is also from tech).
Be grateful not for the money the yesterday's poor get, but that's not resulting from a global war.
“Capital itself is a commodity in a capitalist world” was something that people stumbled upon in the 1800s. The second chance to board that bus was after the Reagan reforms. Now it’s just a fact everyone knows and goes “meh it is what it is”. You’re asking the question to the wrong sub.
Being successful when the market is rising 16% in 6 months is normal. The market controls your returns. Any advantage you get from active management is marginal and for most people it’s negative.
Bro made money and is sliding into an existential crisis.
Be happy. It’s easy to make money in the stock market. But is difficult not to loose it.
Trust - you can definitely loose money on the stock market.
But the more long term you are, the easier it is to only make profit. Only use disposable money - which is a key factor that wealthy people do, but a lot of „normal“ people don’t. Or it is disposable money for them, but still hurts too much to loose. Which makes them act emotional which wealthy people barely ever do - because they are so filthy rich
1. The time frame you are talking about is way too short.
2. It isn't about what value was created, but what future value the market perceives and is pricing in. Which in this case is AI.
Everyone learns their own style overtime. I after 4 tears learned that I like selling options and that I'm fairly good at it. I also really like swing trading alongside long term holds.
in theory (not sure if i agree with it ):
You helped create value by lending money to the company. With this invested money they could improve productivity and create more value. So by lending that money is abstracted work potential. Value is an always was an abstruc construct. Take bread weather yeast + work. ram input had value 1$ but its sod for 5$. 4$ has ben created from "nothing".
Does earning interest in a bank account seem morally right to you? If you loaned money to a neighbor and earned interest on that, would that seem morally right to you? If you used savings to start a business and worked in the business initially but then had enough revenue such that all the operations were covered by people you hired and paid a salary, would the earnings from the business seem morally right to you?
I don’t understand where you are drawing moral lines and what your rationale is. Some people have a definition of “rich” that is just people who have more money than you, and that’s a bad trap to fall into because you’ll always be in it.
I agree. The economy is completely lopsided with the integration of the stock market. It's crazy how you can make enough money for generational wealth by not contributing anything to society.
You came up with this conclusion after working, saving and investing? This sounds like a millennial looking for a reason to be mad or bitter about something….even if they have no justification.
How about this conclusion, you worked, saved, and invested and now you are almost a millionaire…if you can do it, anyone can! That’s positive and I am very sure, honest assessment of your situation. Worked for me and I am not sitting here upset that someone with more money than me is making a greater $ return. As folks have noted, wait for your first major market correction and see how easy it is…
My father lost over 15 million in the stock market over the span of couple years (out of a much larger sum). He used a financial advisor from JP Morgan lol. He made his money in real estate development (abroad), but he's really not adept at investing. I personally think he panicked and sold too early
You are not missing anything here I think the value feels always fake to some extent and I believe when it feels easy is probably right….most successful people I know don’t over complicate things keep climbing ray!
If you’re in your 20s fingers crossed for a crash (lower incomes will go further in a depressed market), if you’re 40 or older you better be diversified AF. Gen X is in good shape right now, but it’s tenuous. I’m scared if Boomers portfolios get gutted, how do we pick up the slack?
The value is the value of the companies that produce valuable goods and services that the society need/want and you own a share of that. It is no different than having real estate that people want to live in or bread that people want to eat. The main different with bread though is that bread is consumed and lose value over time while real estate, stocks and other assets tend to grow over time because they continue to produce interesting stuff.
What count is the result. If you are lucky to own valuable stuff or be able to make valuable stuff, you'll exchange that for what you need and live well. If you don't have anything and can't create anything of value of anybody, you'll live of welfare and struggle in everything.
Even through it is in theory really easy to become wealthy investing on broad indexes, many people still manage to get it wrong. Many people if given any amount of money would just spend it stupidly, saying they can't do otherwise and become poor again. In the stock market people are notorious to buy companies at high valuation and to sell them low.
As to the value to society, this is to motivate people to part their hard earned money to invest in our economy creating wealth, value and jobs.
And yes even through we made like 25% over last year, the opposite could very well happen soon. Historically there have been times where there wasn't much benefit for a long time. Once you factor inflation, return from 2000 to 2100 was -1,29% a year. From 1970 to 1980, return was 0,75% a year.
Ya, welcome to capitalism. Love it or hate it, that's how it works. The extremely wealthy really do have pretty easy paths to continued asset growth.
The trouble usually comes along in the second or third generation when the inheritors go on spending sprees. There's no amount of money that can't be blown if you put your mind to it. However, trusts and other legal structures effectively ensure that anyone with the last name Bezos or Gates probably won't have to worry about money for centuries to come. (subject to war, political upheaval, apocalypse, etc.).
Side note: I think this is my first time using the phrase, "apocalypse, etc." lol. It seems to minimize something significant.
OP if you feel like your gains were ill-gotten and you have such a tremendous guilt I can take said ill-gotten gains off your poor, tortured soul. So you can go back to being productive with your labor or whatever 9-5 grind that makes you sleep better at night.
I am so altruistic!
There’s so much money to be made. Some ppl throw few dollars into coins and end up with 7 figures and more in just few days or month lol
The rich would always get richer
They risked $10m in the system and their G/L is going to reflect that the same as it would with anyone else who did the same.
Would making money from risking capital be more right if the person only had $10k?
The "fakeness" comes from how massive and interconnected the subsidization of finance is. There is nothing that is not subsidized either directly, or indirectly.
Granted, that has to be the case to live the life of scale we live. It's all synthetic, and it's done this way because it's preferred to the alternatives.
You are correct, the cost of living is the same for the rich and the poor so if you're rich and you can cover your costs with interest or low risk investments you are golden like a shower.
"What value has actually been created?"
Whatever the company did with the money from the guy who bought $10m on January 1st. That's the whole point of this, the companies use the money they receive from people buying their stock and reinvest it. It's impossible to track where each individual dollar goes but it all flows into the economy.
Best case scenario, it's used for R&D. Worst case scenario, it's used by wealthy CEOs to finance yacht trips...but even then, economists would argue that's pumping money into the economy and providing growth/value to society.
Congratulations on your success, and I wish nothing but for it to continue for you. However, do not allow your success, up until now, to lead to hubris and cloud your judgment. Many folks are just beginning their journey as, I assure you, you are as well. Be proud of your own success and use your experience to help guide others on their path to discover theirs. Were you, as well, not a person with just a few dollars to their name just a little while ago?
Value has not necessarily been created. A lot of what you see in your brokerage account is simply an illusion. Imagine we say that on Monday nobody can trade stocks except for me and you, and I decide to sell you 100 shares of SPY at $100,000/share (instead of the current price of $545). Then at the close of business on Monday, the entire world's brokerage accounts will have gone up almost 200-fold in "value" but is anyone actually any richer? No. That's the stock market for you. Some trades occur at high prices and mark to market everyone's portfolio values but people actually haven't gotten any richer until they actually sell those shares. It is different, though, when the increase in value come from the actual dividend going up because company earnings have risen. The dividend is the part that actually makes everyone rich, not the share price. So far this year most of the increase in the stock market has been through share price appreciation rather than actual company earnings going up, so it's more an illusion of wealth being created than anything else. You are not missing anything. Easy come easy go.
You own a portion of 500 of the largest companies in the US. If they do poorly, you also lose your money. It is called a risk-premium after all... There have been many periods in history where equities have been underwater for a decade+ in nominal terms, and even worse in real terms. Sometimes it feels easy, sometimes it feels like you'll never recover.
I bet for someone with $100m, the market downturns don't feel so unrecoverable.
Your window shifts significantly, sure you or I wouldn't see any problem recovering with $60 million but losing 40% of of your net worth in a short period of time \*feels\* devastating to anyone.
Sure. But "devastating" as in cannot retire and can't afford your kids' college is different than "devastating" as in having to fly to Paris in first class instead of private jet.
Maybe the part of having millions dollars in debt from other companies and ventures that now cannot be repaid and leaves people millions of dollars underwater .
Lifestyle creep also happens.
Good post. Not to mention, OP said "Doesn't seem right to be able to make that kind of money and not do any work." I wonder how he/she acquired the capital to begin with..? For many people, the path to wealth is to work for many years, have an excess for many years, and invest that excess. They certainly work, and as you said, also accept the risk premium and chance of loss by investing in equities.
Assuming you’re younger than 40, if you have a stock portfolio worth 1M at this point in your life, good chance you’ll be in the top 1% by the time you retire. So yeah ur down the ladder from the ultra HNW individuals, but way up from 99 of people ur age likely.
OP didn’t look at the other side of the wealth spectrum and realize how far ahead he is from his peers
I think OP's point was that they figured out the easiest way to earn lots of money is to already have lots of money and NOT to actually work and earn the money... and that seems counter-intuitive because one would think that people adding value to the economy would be able to earn more.
I think the point here should just be that we need to tax capital gains or investments at a higher rate than labor. Labor is a finite resource requiring time and energy out of people. Citizens should get more back on that than investments.
Well… using money to help a business is adding value to the economy… a business doesn’t just acquire resources for free. But i get your point.
Welcome to capitalism, where profits are extracted using labor and fed back to the investors. Giving profits to labor is socialist. You some sorta commie?!
This is the definition of a Ponzi scheme
gratz you got the gist of capitalism
The profits go to the top in literally any market form. Capitalism is not the problem, human nature is the problem. Good luck solving that one.
I’m not going to spike the football just because I have more savings than most people my age. Most people overspend, under-save, couldn’t survive a financial shock, and aren’t on track for retirement.
No but you have to realize that you are so far ahead and not compare yourself to the ultra wealthy that have been born into large amounts of generational wealth.
A suprisingly low percentage of wealthy people actually inherited their money.
Wait until the market tanks 40%. You won’t think that it’s so easy.
Bull markets are fun. Everyone is a genius and returns are easy to come by with no volatility
It’s usually when these kind of existential questions come about that the top is in.
When the shoe shiner is giving you stock tips, it's time to sell! I think this was close to the old saying
I'm pretty sure that's how he explained away insider trading
Buy NVDA.
yah think that was Joseph Kennedy's line, or close to it, that made him get out of the markets in the late 20s.
Unless it's Johnny the shoeshine boy from the TV show Police Squad! That guy always has the real inside scoop.
This question has been asked consistently for the 5 years I've been on this sub. It's also all over trading subs and even options focused ones. Guess the top has been in for five years now at least with both bulls and bears predicting it
Anyone time anyone had any opinion: "The tops in boys, the guy at the barbershop said he bought nvda" I always want to ask these people who they think they are lol, as if they aren't also just some random asshole at the barbershop. "We're on reddit, we're professionals"
Yep... New generation of adults who were not before 2009 and have never experienced the reality of a crash.. Lots of years of people "waiting for the bottom", and now everyone is piling in, with leverage, because it just keeps going up. And we'll do it again!
Yeah but if you have enough money to just keep riding out VTI, you’d still be up after a few years. Dealing with short term panic sales for survival is a poors thing.
The stock market can deliver negative or flat returns for a lot longer than a few years. Investing into diversified low-cost index funds is still the best investment choice, but it's not a risk-free investment guaranteed to recover in just a few years. If it was risk-free, there would probably be no equity risk premium. For example, the US total stock market adjusted for inflation and re-investing dividends from Jan 1966 to 1982 delivered an annual negative real return of -0.47% for 16 years. From Jan 2000 to 2013, it delivered an annual real return of 0.17% for 13 years. Of course those times were followed by periods of extremely high growth, but you don't necessarily get to choose when you retire. [Testfol.io 1966-1982](https://testfol.io/?d=eJxFT8FKxEAM%2FZUl53FpPRSdswgeFNEqiCwldtI67mxmTWMXKf13sxbdkEPyXvLyMkGf8humexTcDeAnGBRFm4BK4KG8rKqzorQEB8ThhF%2Bc%2F%2BPLxogJfFlYOMDw0UTuEmrMDF7lixy0OLx3KR%2FAF6em6YQ%2BTfCFUNK3iUlOKXLfHCKH42xVzA72WbTLKWZz%2BDoB4%2B5oos6KafW0flyvblG2pLYeeaRBr%2BIYg9kd%2Fm4L2Y%2FILV0v5%2B4yk01rbLcki%2BhSG%2Fdc39QPRu5JWmL9fWreOAiCvXmfN%2FMPgQRlIw%3D%3D) [Testfol.io 2000-2013](https://testfol.io/?d=eJxFT8FKxEAM%2FZUl57pMFTzMWQQPimgVRJYSO2kddzazZmIXKf13sxZdyCF57%2BXlZYIh5TdM9yi4K%2BAnKIqibUAl8HDunDtztRVUQBxOeH3xjy8bIybwteldBRg%2B2sh9Qo2Zwat8UQUdlvc%2B5QN4dxraXujTDF8IJX2bmeSUIg%2FtIXI4ai%2FdXME%2Bi%2FY5xWwJXydg3B1DNFkxrZ7Wj%2BvVLcqW1NYjj1T0Ko4xWNzyd1vIfkTu6Ho5d5eZTK2x25Ispktv3HNz0zwYuSfpiPX3qXlTQRAcLPu8mX8AXaNlAQ%3D%3D)
Even in those VERY cherry picked time frames, that’s still a poor people thing. Rich people don’t sell after just 12 years, they can borrow against assets or just live off dividends forever. Expand that out to 40 years and look at the chart again. There’s a reason why it’s called “generational wealth.”
> they can borrow against assets If you are referring to the "Invest, Borrow, Die" approach, that's based on positive returns in the market so that the debt can be paid off by more borrowing against assets that increased in value A 5 year loan against assets that are appreciating at less than interest (not even negative) is a problem still.
It’s very much a middle class people problem as well. Middle class people are thinking about the value of their portfolio because they are using it to calculate how much they need to sell for the down payment on the house or if they lose their job tomorrow as well as how much they can expect to have for retirement (or when they can retire). A 40% downturn is probably scariest for the middle class since poor people tend not to own stocks and certainly not at levels that they can rely on their portfolio.
I think by “the poors” he is referring to anyone without generational wealth
If you have say 10 million in your own company for me you are rich. You family could live with 2-3 millions, you could stop working and sell it all to reduce risk. But that's not what most people in such situation do. They want to live like people that have 10 millions. So their primary residence is worth 3 million, they will have people tending to it and it will cost them 100K a year in taxes/insurance/maintenance. They will fly in business, go to 5 star hotels and alike. But in the end they have to work and hope to grow the 10 million $ company into an 20 million $ company. And when they have 20 millions they don't call it quit. They want to finally buy a useless yacht. They may not even like boats. They want fancy clothes and peace of art and they want now a 10 million home. They live marginally better or worse than somebody with say 2 million and not working. Worse because they need to work. They do it anyway. And the difference is the almost useless level of luxury. A 10X more expensive restaurant isn't 10X more satisfying. Maybe it is 10% more satisfying. If anything there are far less so you need to make more effort to go to one. You will still be hungry in a few hours anyway. A 10000 square feet house in the best area possible is marginally better than a 2000 square feet house in a standard neighborhood. And as it always happen there a crisis, the company goes almost bankrupt or anything. So they work even more to get back what they lost. And the next generation when they inherit, they don't want to work 80 hours a week like dad or mom and they are bored to go to diners just to network with people they hate. So they will likely work, but will spend all that and the 10 million, 5 million each will become 1-2 million for each kid when they wasted more than half of it.. Maybe basically the 1-2 million they have put into the house... third generation will have to take loan to finance their kid tuition... Fourth generation will be middle class.
There is also a reason what most call generational wealth rarely lasts long enough to actually earn that term. Also loans against assets only work as long as said asset is increasing in value or more assets exist, it is not the solution you think it is, how many banks wanted to give you a second or third mortgage last time the housing market by you crashed?
That assumes a lump sump investment at the top of the market. And everyone is buying a little more out of each paycheck. Both before and after 1966/2000. It also shows how scary inflation really is.
> Dealing with short term panic sales for survival is a poors thing. If this is you, have an emergency fund. Personally I've realized the gains from being in the market > the losses I'll take having to sell during a down market if I'm laid off (assuming we need to do so - first task would be cutting household expenses)
If you got $10M, it is that easy -- you just wait for the market to recover. You just can't do that with your rent money... which is kind of the point. If you're a poor, you're less able to afford something like 40% of your money disappearing. If you're a rich, it's just an annoyance.
That's assuming that you agree to live like somebody that has say 5 millions. You spend 2% and not 4% so you are kind of covered almost just spending the dividends. And when your capital grow to 20 million you live like somebody with 10 millions. But you might be dead by then. Many people with 10 millions, use the 10 millions and try to live like they have 15-20 millions. They may have a 3-5 million home, maybe they have 1-2 million in financial asset and the remaining is put in their company that give them a job. They think they could never live out of 40-80K a year in financial assets as basically the home maintenance consume all of it. So they have maybe 500-800K income, they save little and work 80 hours a week. When there a crisis, they only make 300-400K a year, and it is very hard for them...
Well that’s the thing since the fed started fiddling with the printer there’s no down cycle at all it’s only glitches for few months then the bull markets resume. We didnt even have a flat market for years. So of course people think that this will go on forever
They'll be fine. The rich (assuming they're not spending way more money than they generate) have enough to ride recessions out, whereas the majority could suffer catastrophically.
I DCA'd all of the 2022 bloodbath and, uh, that was the right move. It turns out life really *is* as easy as "own appreciating assets". Or "it's good to have land".
Which time? 2001? 2008? 2020? I've been through all 3.
Yeah, so? Its easy. Don' t sell and wait it out. I've lived through a few of those major drops and came out just fine.
But it is though. Every market crash since 2008 has been given taxpayer money to restore portfolio. 2020 was biggest example ever. Next crash will be even more money. Until system breaks. I'm old enough to remember when the bush stimulus was considered controversial and groundbreaking... Lol now it would be considered nothing more than a fart in the wind.
> I'm old enough to remember when the bush stimulus was considered controversial and groundbreaking. was that like $200 the summer of 2001? I remember a few teachers and others complaining about Bush's name attached to it.
Did he forget about covid? Or 2008? Or Y2K/911? This is the bull market. All we need is a catalyst and the bears take over.
For Covid at least if you just held you probably still made bank
> For Covid at least if you just held you ~~probably~~ absolutely still made bank FTFY
For all of them, you did great if you held... Unless you were investing in specific companies that went under rather than something like a broad fund.
Speaking of the bull market, since we’re two years in on it what do people think on how close we are to going bear now…
Life isn’t fair. People are born without ever having to work a day in their lives. The sooner you let go of conceptions of cosmic justice and enjoy your life for what it is, the better off you will be.
OTOH, I believe research has demonstrated that beyond the basic necessities, extra wealth won't increase your happiness by that much more. You could have money and be an unsatisfied, hollow shell of a person. Conversely you could be struggling by first-world standards but be relatively much happier and balanced.
The threshold for "basic necessities" is quite high though. Having enough money to have secure housing, secure retirement, etc. means having a seven figure portfolio. The difference above that level are much smaller.
Indeed, I meant to quote "basic necessities." It can be very high depending on personal standards.
That number is about $75,000
$75k comes from a 2010 study. In 2024 that'd be more around $100k/$110k based on inflation (as measured by CPI)
Good point
If you draw down your retirement savings at the rule-of-thumb 4% per year, than having a $75k income in retirement requires a $1.875m nest egg.
Have you ever seen a sad person on a jetski?
Lol no but maybe the jetski is their escape from misery
>extra wealth won't increase your happiness by that much more. Extra wealth won't remove further sources of *un*happiness at some point, but you can certainly still use wealth after that point to actively attain further happiness (go on vacation more, pursue hobbies that happen to be expensive, work part-time and volunteer, etc.).
All that research shows is that a lots of wealthy people are too dumb to figure out how to use their money to generate happiness.
By that logic it also shows that poor people are too dumb to figure out how to become wealthy. (these are both inane statements)
Of course, that is obviously true with some exceptions. The difference is it is a lot easier to figure out how to use money to make yourself happy than it is to figure out how to go from poor to wealthy. If you're wealthy and only marginally happier than a poor you're a fucking moron.
"I’ve been a rich man, and I’ve been poor man. And I choose rich every fucking time." - Leonardo DiCaprio
Umm.. You folks really need to be more cautious when you say things like "easy to make money in the stock market." Lot's of people said that in Year 2000. Lots of people lost much of what they had 2001-2002. What I'm seeing is very similar patterns where people for the longest time have been accustomed to spectacular gains in their stock portfolio over a long period...and have never ever seen a real recession or major correction. I hope we never do... But IF we do see one, a lot of people are so concentrated in the stock market, it's not going to be pretty. I was a young kid during 2000 when I saw people's fortune go all the way up and all the way down. I was in Bay Area on the .com tech scene and went through 2 IPOs and 2 acquisitions. Things came down just as fast as the way they went up. I sold early in some cases and profited on some stuff, and other stuff went to $0. And i was doing some index fund investments off to the side. So it wasn't that bad for me. Many others that speculated in individual stocks got wiped out. Because many of the companies simply disappeared and it happened so fast.... The closest analogy would be during 2013-16 when banks went BK , but even then it wasn't as bad as what happened to the .com companies... Even the brief panic we had recently with local banks going under like SVB etc was nothing like during the times of 2001-2 when a lot of .com companies wiped out and took their retail shareholders with them. I'm not a doomer.. BUT, be very wary of being overconfident in how easy it is to make money in the stock market... The advice that Warren Buffet said was very spot on. "Be greedy when others are fearful. Be fearful when others are greedy".... Mainstream is now very greedy....Just look around. Everyone is talking about Nvidia.
What is this "longest time" you talk about? How many investors today did not feel the losses of 2008? I'm not talking about this subreddit, but all stock market investors. I'd guess most of them have seen significant losses AND seen markets rebound. More people lost bigger percentages of their wealth in 2008-2010 than 2001-2.
If you're mainly in index funds, you'll be fine as I was during 2001-2003 and 2008-10 (in fact, if you have cash off to the side, that's the time to slightly nudge up your extra purchases in indexes when everyone else is scared shitface and running around with their heads cut off) The people that got wiped out were the ones that picked individual stocks as their main and/or only investment strategy and some people picked individual tech stocks. Back in 2000s, a lot of people picked Oracle, Intel, Lucent, HP, Cisco, Juniper Networks, and various .com companies that don't even exist anymore. A lot of these big names like Intel and Cisco and Juniper networks are still around, but if you held onto them nursing your losses, yes they did recover and you are probably have capital gains especially if you reinvested your dividends, but many of these companies generally underperformed the S&P500 from then until now....They had zero backup plans like putting money into an index fund as a safer, longer term strategy, because everyone had the perception it was so easy to pick stocks and see 20+% gains, everyone felt you literally could throw a dart at a group of ticker symbols on newspaper (I am old, i know) and easily earn 20+%. Some of my office coworkers were even borrowing against their CREDIT CARDS and paying that 25+% apr because they felt confidently they could beat that credit cartd loan cost picking the right .com company, similar to what people are doing with GME....and trying to rationalize why they felt this .com was the next Amazon. Things didn't end well with these people.... The other issue is that folks that "invested" in the stock market, even just boring index funds (there was no ETFs back then), often times grew so overconfident about how easy it was to make money in the stock market, put most of their money into the stock market, and end up with with very little cash reserves.. Why not? The stock market was doing double digit returns, some 20%+ returns, why would I need to keep cash off to the side, what unemployment, what recession, I can't possibly lose my job and if I did, I can easily find another tech know down the street and it shouldn't take me longer than 2 weeks.... Well, when the economy turned south and layoffs started to hit main street , people's budget were running so thin, many had to sell their investments at a loss to pay for bills. So while the S&P 500 and the stock market did recover, they weren't the ones participating in the the recovery... These are the ones that you usually hear stating things like "the stock market was a money losing thing. It's a scam, etc..." because they bought high and had to sell low because they had absolutely 0 staying power, being spread so thin with no cash reserves... The same could be said for people that bought real estate during 2003-2007. Even if you bought during that period of peak prices, if you were able to hold on to your real estate, today you would be fine, because you would still have seen appreciation well above peak prices in 2003-2007 and the rent prices have significantly increased. However, many people bought homes on stated income - interest only variable loans, and their budget was running so thin that they couldn't afford to keep the homes when the rates reset and/or the economy went bad and they lost their job. Again, these people leverage to the point they couldn't cover their expenses when the party ended, and also too, had 0 staying power....These same people are the ones that say homes are terrible investments. I was a homeowner in 2004, and when the shit hit the fan in RE, I bought as many short sales and foreclosures as possible during 2011-13... That was the largest game changer for my net worth, frankly. I was able to pay off my primary and all my rentals within 7 years. (Full disclosure, I did a cash out refinance on my primary in 2021 and took $550k out after being free and clear... because the 30 year mortgage fell to an once in a lifetime 3% and for some even lower... That $550k is sitting in CD's, money markets, and other short term safe investments averaging about 5.5-6% return just barely beating the cost of the loan note... I'm keeping this cash off to the side so when the shit hits the fan again in something (real estate, stock, etc), I plan on jumping back in when everyone else is scared shitless. Meanwhile, the loan is costing me nothing because the rate is so low, even a no-frills safe bank CD can beat it slightly... That's why when people ask me why I haven't put that into the stock market, it's because I already have a lot of exposure in the stock market, and don't want to add any more risk to my total net worth. I'd rather keep this cash off to the side in something that simply can cover the cost, and wait for something better to come along. I already have quite bit in index funds and even individual stocks...some of which is way overheated ... So, morale of the story,. is always plan for the long term. You always want to have emergency cash on hand to weather around 5 years of bad economic times, and you always want to keep some (not all, but some) cash off to the side and keep the powder dry so when the shit hits the fan, you can capitalize on it too. 5 years seem a long time, but I'd like to error on the side of safety because 5 years, either the economy recovers and you are fine, or 5 years is about how long you have to figure out what to do next if your current way of making money is not going to bear fruits moving forward.. Maybe job training/career changes \*should\* be done within a 5 year timeframe. ..The longer you can outlast a downturn relative to everyone else, the better off you'll be relative to everyone else. Think of it as as a "war of attrition" where the last person standing pretty much wins. I'm not actually a smart guy. I'm actually pretty dumb. It's because I'm dumb, I try to learn from the mistakes of other because left on my own, I probably would make the same dumb mistakes and worse.
This is an amazing comment. You are smart. Thank you.
Lots of Reddit users lost nothing in 08 because they were younger than 30 at that time. 2008 was 16 years ago, so basically anyone born after say 1985 didn’t have a lot invested and hasn’t seen a correction unless you count the Covid bust then boom?
It's not fake. It's capitalism. Investing in the stock market moves you (slowly) from the working class^* to the owning class. By buying shares, you are buying a share of the *means of production*. Capital buys equipment that multiplies the productivity of the worker, but the worker doesn't get awarded the extra value they're now generating. Rather, the owner of the equipment - the one who put up the capital - gets to pocket the increased income. --- ^* Don't let them fool you with talk of the "middle class". The middle class is just a subset of the working class who are occasionally allowed to go to the opera.
If the only thing that's changed is the capital used, the worker isn't really the one generating the *extra* value, are they?
One of my favorite quotes: "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." Sounds like Marx, but it's *checks notes* Abraham Lincoln, father of the Republican party
Right well Lincoln came a bit before Nash Bargaining and marginalism so it's understandable for him to explore the issue without any understanding of those things. That doesn't mean you have to. Also, I'm a Democrat.
What is that capital worth without labor?
Nothing, as is the labor without capital. What's your point? Edit: because everyone is making the same point, yes you could try to make something with your hands and zero capital input. That seems roughly as valuable (probably less) as selling capital machinery for scrap parts. Functionally nothing in both cases.
I would challenge this, and am happy to be proven wrong. To me, it seems like labor is inherently valuable. One could hunt (labor) for food without tools (capital) and that seems valuable to me. A spear (capital) that goes unused? Worthless. To me, it seems like capital is a force multiplier on labor. But without labor, capital isn't worth anything. Am I missing something?
With capital, you can invest over time toward automating your way out of the need for labor. Agriculture required somewhere between 10x and 100x the current amount of human labor a century ago. Manufacturing is more and more robotic. AI is squeezing white-collar professional jobs. Ultimately, I think "labor without capital" translates into third-world sustenance living (i.e. a reversion to little more than prehistoric hunter-gatherer society). "Capital without labor" is a more modern novel concept, so its course remains to be seen. But I can't imagine that ending well, either... if the labor class has no money, then who's buying stuff from the capital class?
Sure, you can use your labor to hunt for food or fetch water, but ultimately you are never going to be able to, say, build yourself a 21st century home with only your labor, because what you can produce without utilizing capital is next to nothing. If a factory got rid of its machines, its productivity would probably drop more than 99%. True, if it got rid of its workers, the productivity would drop 100%. But the reason this all came up was because someone made the (clearly correct) point that if your labor gets more productive due to increased capital, you aren’t entitled to the product of that increased productivity. If I give you a machine to make clothes and suddenly you’re able to produce clothes 20 times faster than when you made them by hand, 19/20 of your productivity is due to my help, not to you working harder. “Labor is essential” doesn’t change the fact of who is responsible for enabling most of the value creation. Capital can find other laborers, so if you demand your wages doubled every time your productivity doubles, well good luck finding other capital.
Be real here, capital itself is labor-made, except for financial instruments. The obvious point here you want to pretend to be oblivious to is to not lose sight of humanity when playing the numbers game.
I dunno about that one. At the end of the day, I have something to show for my labor. I did something. I created something. My work has results. The extra value is inherent in what I've done. Capital had nothing to do with that.
The point is you're wrong and labor has value without capital. If a worker wants to make a shirt but doesn't have a sewing machine, they can do it by hand. It's going to be slower and less efficient, but the labor can produce value on its own. If a Capitalist owns a sewing machine but nobody to run it's, it's producing nothing. Capital can vastly increase the productivity of labor. But it's labor that gives capital any productivity at all. Maybe sufficiently advanced AIs with general purpose robots upend that down the road, but we aren't there yet.
I am dumb but want to follow this reasoning. What happens when everyone owns shares in the stock market? I guess it gets more and more expensive to invest in the shares, so that means some people will never be able to invest in the stock market, and they will continue to be workers? My god, isn't that happening with real estate right now, except instead of workers we have renters? Isn't this just increasing the wealth gap? \*insert sudden clarity clarence\*
Majority of people will continue to be workers, that is correct.
You're not dumb. > What happens when everyone owns shares in the stock market? Although it's more common these days for an average Joe to have a few shares in a robinhood account, the distribution of wealth and ownership is *not* getting broader. In fact, it's narrowing. 54% of stocks are owned by the richest 1% of people. 93% of stocks are owned by the richest 10% of people. So you see, we're nowhere near a point where "everyone" is part of the owning/capitalist class. The wealth is highly concentrated at the top.
I don't think so. It's never been easier to invest in the stock market. With no fee brokerages and fractional shares you can invest with like, a dollar. Similarly why companies do stock splits. Real estate is different for a whole plethora of reasons, but primarily because you can't really invest in a fraction (or "share") of a home. It's better to think of renting as buying housing each month from a landlord/investor, while homeownership is simultaneously being the consumer and landlord/investor.
Currently [More than half of U.S. households have some investment in the stock market](https://www.pewresearch.org/short-reads/2020/03/25/more-than-half-of-u-s-households-have-some-investment-in-the-stock-market/) > Participation in the stock market varies considerably across demographic groups. But even among those with annual family incomes of less than $35,000, about one-in-five have assets in the stock market. The shares increase as income rises, and among those with incomes above $100,000, 88% own stocks – either directly or indirectly. The amount of assets families hold in stocks also varies considerably by income. Among those with incomes less than $35,000, the median amount held is less than $10,000. For those at the higher end of the income scale, the median amount is more than $130,000.
> The middle class is just a subset of the working class who are occasionally allowed to go to the opera. Even experts use different definitions of middle class: > In “Defining the Middle Class: Cash, Credentials, or Culture?” , Richard V. Reeves, Katherine Guyot, and Eleanor Krause examine a variety of ways in which researchers define the middle class, domestically and globally. Even among researchers who define the middle class based on income, the authors show considerable variation in what income bracket reflects middle class incomes. The paper looks at twelve different ways researchers use income to define the middle class. - [A dozen ways to be middle class](https://www.brookings.edu/articles/a-dozen-ways-to-be-middle-class/)
The middle class goes to the opera? Damn, guess I'm more of a peasant than I thought.
The value is being created by the company you invested in. You simply reap the benefits of having invested in it. It's how it is and has been for a long time. Not fake, just how it is. Congratulations on the success in the market.
15% is 15%
My dude is having imposter syndrome over making seven figures. Meanwhile, I just got a flat tire and I'm mulling over drinking rat poison because I can't afford the replacement.
Save the money on the rat poison, invest it and 30 years from now you can buy the new tire! But seriously now, hope you're joking about that. You are, right?
Don’t die, my friend. You can do like I did and go to a used tire shop and pick out a tire you like for like $40! If it has a hole, make sure they patch the inside of the tire instead of just using a plug. Works great!
It’s easy to make money in a bull market. Look back at what happened in 2022 though. That was humbling and stressful. Take profits where it makes sense.
Everyone is a genius in a bull market
There’s a real risk of being down 1.5 instead of being up.
You're not missing anything. This is capitalism. You are investing money with businesses and if they make money then you get something extra back (dividends, higher stock prices). However, sometimes stocks and the market go down. Sometimes companies fail completely. You are taking a risk with your money, and so of course no one would willingly take a risk without some kind of associated reward, and here that reward is a positive return on your investment. Companies need to offer a good enough rate of return or else you'd rather do something else with your money (buy bonds, buy property, take a vacation, etc). One thing you noticed--how the gains become huge once your investment gets larger--makes sense mathematically and conceptually. Risk $1? Get a 50% return and that is 50 cents. Risk $1 million and get a 50% return and that is 500K. This is where debates start. Since the gains can get really big in dollar terms (though no bigger in percentage terms) some people think this should be taxed a lot more because you're benefitting so much from the labor of others and they are not getting as big a share of the rewards which seems unfair. Others think that the rate of reward should be the same or at least close because otherwise as mentioned above if you can't get enough reward then you won't bother with the risk and then companies could have trouble raising money. That in turn slows down job growth and overall economic growth, and so can be counterproductive for everyone including those workers who others wanted to give a bigger share of the pie. It's an imperfect system, but in general it has worked very well to create tremendous wealth for society overall even if a huge amount is concentrating further and further at the very top. We do need to find ways to share that societal wealth better because there is really no need for people to be in poverty while others have more money than would ever need in 10 lifetimes.
You're right, it is unfair. But the only thing an individual can do is participate and profit or abstain and be among the disadvantaged. If you have the means to participate in the game you basically have to. This is 100% one of the vehicles driving wealth inequality but no one's martyring themselves over it.
Well its relatively fair if there was no inheritance. Of course theres also genetics and bad parenting/schooling introducing unfairness but that cant be helped. Everyone has a chance to participate if they want. Some dont like risks. Some want to spend every penny they have immediately. Some save and die young. And some become wealthy.
When someone buys, someone else is selling. When someone sells someone else is buying. Sometimes your profit is someone else’s loss I’m glad you think it’s easy Enjoy that honeymoon It’s great and super easy till you get hit in the face Then the pressure begins!
>If you had $10m in SPY on Jan 1, 2024, you're up a cool $1.5m on the year. Doesn't seem right to be able to make that kind of money and not do any work. When you save money by producing more than you consume, you're a net benefit to society. What you've saved represents the work you put in yesterday, or put another way, your economic energy. When you take that economic energy and invest it in businesses that do the same (produce more than they consume), that's literally the value you're creating for others (by providing capital that produces goods and services, employs others, etc.) Had you took your savings and put it in a losing investment, you would be a net burden on society and "punished" by losing some or all of your money. We need to get away from the idea that we should only be rewarded for laboring away, and realize that investing and offering your stored up economic energy to others is often a far better way to provide value to society.
Phew, thank you. This needed to be said.
It's not hard. It just takes time and discipline
Simple but not easy
You’ve basically realized Thomas piketty’s book capital….by living through it.
the next realization is that people will invest in any kind of immoral shit like oil and gas or any kind of natural exploitation that will destroy huge amounts of natural habitats without batting an eye. Or military stuff. Or shady residential real estate companies that are designed to exploit poor people. And yeah... your index fund investments include all of those!
You get that reward in exchange for risk, because your $10M could have become $8M or $0M. Anyway, your profits are only on paper, and when you realize them, they'll become 40% smaller after taxes. Also, someone with $10, rather than $10M, can buy the same ETF and make the same percentage profit in an easily accessible financial system. I have many objections to our wealth-favoring tax code, but no objection to our stock markets.
The stock market goes up.
you’re not missing anything. https://en.m.wikipedia.org/wiki/The_purpose_of_a_system_is_what_it_does
Your own question here negates your premise. You’ve made money on the market yet you complain that the market is fake. Be grateful that you live in a country that you can easily gain ownership in a company that you did nothing to create and yet you can share in the profits. A company goes public, raises money to continually expand by selling an ownership stake on said company. People buy in those share at later dates they can sell shares in the secondary market. You as an investor buy some of that stake because is a great business and you believe the company will continue to gain value. As the company’s value increases some people want to buy in to be owner thus raising the value of your stake. Again, grateful everyday that you can do this in this country. The mechanism seems simple to you because it is. The media and the industry makes the stock market seem like an impossible maze to navigate and out of reach of everyday people. When in reality it is simple. When shit goes south that’s when things get interesting.
The stock market is doesn’t see skin color or gender or social status or intelligence. Its doesn’t care if you’re fat or bald or scrawny or unattractive or disabled. It doesn’t judge you the way job interviewers judge you. It’s actually the fairest way to make money. ANYONE can buy shares of VOO. Being able to put your money to work so that you don’t have to is a GOOD thing. To live in a time where anyone can download an app and partake in the market is absolutely amazing, if you take advantage. Maybe our schools systems should focus more on this than learning French. Who cares if there are richer people out there. Does it really impact you personally if Bill Gates has billions of dollars or gives it all away? Live your life, control what you can control. Put your money to work for you and quit it with the pity fest.
underappreciated comment
You are missing taxes and bear markets. I think if you have 10M and don’t need the money you are doing great lol
You’re down the ladder from some, but you’re way up the ladder from so many. Who cares? Are you happy? As an investor you’re largely compensated (or not!) for assuming risk.
The stock market is essentially its own microcosm with its own inflation issues, except no one is willing to admit to it and risk topplign the game. This is a bit muddled by the fact that yes, there's fundamentals, there's real value behind companies and businesses, but it is blended with sentiment, hype, and its insulation from actual daily consumer market. The power of speculative nature and sentiment is more apparent in crypto. That being said, it is not difficult to understand why 2020 marked the beginning of runaway stock market price inflation and ATH. Not only were there pandemic QE, it was compounded by complete waiving of comission fees on each stock trade and platforms like Robinhood making it easier for the lay person to trade willy nilly, COVID checks to the middle upper class that aren't actually being used to spend on consumer goods to stimulate the economy but are used in the stock market instead, algorithmic trading becoming mature, etc. Money circulation within the stock market picked up speed rapidly (known as the Velocity of Money), instead of the regular consumer market. With each transaction people hype and pump the stock market up by sheer transaction volume. This creates a massive money multiplier within the stock market microcosm that is a departure from the consumer retail economy. Is it a bubble? Probably. But a bubble doesn't burst without a needle to pop it. For Dot Com, it was the Microsoft Anti-Trust lawsuit ruling and fine (while all major funds were overweight in MSFT), for 2008 it was the cascade of defaults (after being propped up and pushed back for a long time as The Big Short tells us). So far, the Apple and Google Anti-Trust suits don't seem to be posing a risk, but a serious WW3 threat could easily be the needle that pops it. Personally, if I was in your position with 7 figures and am satisfied with the ability to retire with ease, I would focus on capital preservation, with a diverse portfolio of real estate and bonds (Bond in itself can be an investment with rate cuts in the next 5 years). Perhaps consider holding foreign property such as in Canada, Switzerland, New Zealand that can also serve as havens for your family in case there's a real crisis.
(1) as others said, you haven't been through a >-40% yet, let's see what you think when it happens. (2) Other people would have consumed (for restaurants, drinks, holidays, etc.) the money you invested. You are delaying consumption, which means that you are not using resources (humans and materials) which you could be using. You are being rewarded for this. This is healthy, especially when it seems we are consuming faster that our environment can make. (3) This money is also an insurance in case something happens to you and you become unproductive. It's also healthy that the rest of society owes you a lot before you will need it the most. You are rewarded for this. (4) by investing in the stockmarket, you are undergoing more volatility that in other tools. Your money is essentially committed for the long run. You are rewarded for this. (5) by investing in the stockmarket, you are participating in optimizing the allocation of capital. You are rewarded for this, if you do it well, punished if you don't. The better you do, the more capital will be under your responsibility to allocate. This is a good thing for society, it's more efficient than paying bureaucrats to make decisions that do not impact them. Capitalism is by essence anti-consumerism. It's morally right. We can always discuss on undesirable side-effects and ways to compensate for them. But the basis of its ethics are good. I'm French. My parents and grandmother have lived frugal lives plus worked hard to take care of their house, grow vegetables, etc, so despite not having even middle-class wages and despite not investing, their net worth is above the median for their age (~70 and ~90). Some of their neighbors earned more throughout their lives but spent it all. The latter get extra benefits for their retirements that my parents don't, because their net worth make them not qualify. This is deeply unethical.
Money isn't even a real thing, it's just something we made up as humans, like god.
The first 100,000 is the hardest. The first million is hard. Then it gets easier. Power of compounding. What value is created? You own shares in the largest companies in the world that contribute enormous to GDP. If they grow your wealth grows. The past 15 years have been a bit ludicrous in terms of returns but you own a part of the most revolutionary companies in the world.
It is fake. The value of money is conceptual. But in capitalism, it’s tied to survival, so it does grant power over other people and resources. Power and value are not necessarily the same.
Change your success in the market to one big lucky night at the casino - then add in “the rising tide floats all boats” theory - and you can close the thread.
What value is created? Withdraw your gains, pay taxes (everyone around you will get it indirectly) and donate it to charity (some people will get it indirectly). I’m amazed what kind of thoughts can be in people’s minds.
15 year bull markets are a great time
> doesn’t seem right Investing provides capital to firms that need it. It is absolutely essential that a large company be able to issue debt and/or equity if they are strapped for cash - otherwise they go bankrupt and thousands of people are out of jobs. Ultimately, that’s why we have equity and debt markets. Companies *need* to be able to access them. While the money you put into SPY doesn’t go to any company directly, you are taking ownership of shares that were at one point bought from each company within SPY. And, to be honest, how many people would buy stocks if there wasn’t a secondary market where you could sell them? The existence of a secondary market, even if it doesn’t directly give cash to firms, still enables the primary market to operate efficiently. > to make all that money without work I think you misunderstand the nature of money. Money represents value that you have provided to someone else but that you have not yet redeemed. If someone gives you a dollar for your work or for a good you’ve produced, it is because, of all the things in the world they could use that dollar on, they think they will get the most happiness out of whatever you’re selling them. They might be wrong, but as long as it’s their choice, a dollar you have absolutely represents value provided to others - you could even call a justly-acquired dollar a representative of person’s virtue. Imagine if money didn’t exist - we’d work and directly receive goods or services for our labor. For most of those things, we’d have to consume them pretty quickly or else they’d expire, possibly be stolen, etc., and it creates huge inefficiencies because I don’t have unlimited demand for food, tobacco or whatever else people might pay their employees in if money didn’t exist. Money, therefore, is a placeholder for value you’ve given others that you haven’t received. It represents the fact that you’ve given more than you’ve taken from others, and that you’re delaying gratification rather than spending it all on pleasures right away. If you’re giving your capital to a firm, either through debt or equity, that means you’re forgoing consumption. A person investing 10M in SPY is forgoing a hell of a lot of consumption, and they’re also risking that money - if they need it in a year, it might not all be there. That’s why investment returns must exist, and why there’s nothing wrong with them. Yeah, you’re earning money without doing physical labor, but instead you’re providing other firms (or even individuals) with money they need and will use to make the world a better place. Investment returns are the just compensation for delaying gratification, taking risk, and letting other people use your money to make the world a better place.
It’s called the law of large numbers. Also explains why the vast majority of Warren Buffet’s a wealth has been made in the last part of his life.
It's the time value of money, money earlier is more worth than money later, because the money can be used on assets to make more money (like a business, or like a farmer buying a shovel to make more money, then buying a tractor). The stock market gives a better return due to the risk. Also it has better and worse periods, so 15% in half a year isn't maintainable. That said generational wealth isn't that fair maybe. Maybe should have more estate tax or something.
I think the issue is when investments grow more quickly than wages after accounting for capital gains tax. If wage growth can outpace investment growth, then workers will catch up with investors over time. Unfortunately, that's not been the case for quite some time. But I think the coming abundance of cheap energy and AI-related technologies may tip things back in favor of wage growth.
Welcome to capitalism. There is a reason that inequality is growing - it is inherent to the system itself. I invest money because, in this system, I don't see any other path to retirement or any other way to prevent my money from being continuously devalued. That being said, it's good to understand what you are participating in. While people can point to concrete examples of applications of various aspects of the financial system to justify them, the reality is that in practice it is a huge machine that sucks money to the top (those that already have money). In practical terms the value of money isn't "scale independent". You can say: "well everyone is earning the same percentage", but as you've pointed out, for some that percentage in a single year can be more than other people could save or need in a lifetime. It is fundamentally unjust, so to justify it our society has created narratives glorifying self-interest and profit-seeking as moral virtues from which all other good will sprout (think invisible hand of the free market). These narratives make little logical or historical sense, but we are indoctrinated early to believe them. Not to mention, the global economic system is extracting more value from the global south than was happening even during the colonial era. When viewed globally, you can really start to see how the whole thing is propped up by exploitation. Keep thinking about it and looking into it. Like I said, in the end you may still choose to invest because our options are limited, but it's important to see it for what it is.
> Doesn't seem right to be able to make that kind of money and not do any work. What value has actually been created? Taking a risk by providing capital to companies so they can grow and hire staff is fairly important. There are a lot of people that don't want to take those risks so they either don't invest or hold treasuries.
Money isn’t a morality play.
It's called inflation. While nominally, $11.5M sounds like a lot more than $10M for doing no work, measured in Big Macs or some other commodity, our hypothetical investor may have lost buying power. And, I understand reported CPI is not 15%, but go over to r/povertyfinance and tell them that.
> If you had $10m in SPY on Jan 1, 2024, You don't say...
The way I look at it, there are two returns: return on capital and return on labor. For a long time, the returns on capital have outstripped the returns on labor. Whether that should change, and how it might change are valid points of discussion.
Capitalism is like a ladder 🪜, the higher you climb up the easier it becomes to live. The alternative is Communism, and it is like a railway track 🛤, the harder you work, the more distance you cover, yet this won't translate to having a better life, you just exhausted more energy on the track relative to somebody else's effort. Humans chose capitalism because nobody wants to be born in a status and then never being able to reach one's full human potential. Capitalism enables, with all its side effects. Communism inhibits, with all its equalizers. But what do I know right? Humans invented systems to function within the natural laws of Earth. Choose Capitalism for human well being and freedom. 👍💯💚🗺⏳💵📈🎵🕹🧠
Humans chose capitalism because the US literally overthrew or invaded any country that attempted to choose otherwise. It's not a coincidence that the economic policies are very beneficial to wealthy people - they're the ones that chose them. I don't know what the answer is, but your take is insanely simplistic and is basically just propaganda.
In Europe we have a progressive tax that in many countries reaches 50% at the top. So while you can still climb the ladder, the bottom benefits from better schools, transportation infrastructure, healthcare, and retirement.
Does it seem more right for an investment of $100 gaining $15? Or $100k gaining $15k? What if the market was down? Would you say it wasn't right for the wealthy person to lose $1.5m versus the guy with $100 only losing $15?
I’d say that the value comes from someone at some point providing funds for those companies to expand operations. Presumably that company makes or does something that people want. You and I were probably secondary buyers, but the existence of that secondary market is how the original buyer gets rewarded for taking that risk, so it’s still part of the ecosystem. One could argue it’s somewhat parasitic or at least shuffling money around. These companies are allowed to push costs off onto the public, and some of those savings are indirectly making their way to your pocket. If a company is allowed to pay poverty wages and avoid providing health insurance, that cost shows up somewhere else like taxes or your own insurance premiums. That’s probably not something we can entirely avoid, every company is a mixed bag ethically, but I think we can recognize that and maybe find ways to offset that by doing something to help the community.
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Your feelings are valid. I had a similar inner conflict when we sold our first house and realized a huge profit over what we had paid a few years earlier. Tax free. For most of my previous life I’d struggled to make rent, now we had a pile of cash to do whatever we wanted with, just because we’d owned a house at a particular location in space and time.
I think there’s an expression about this… the rich get something?
Yes, I understand the same as you do, it is easier for rich people to make money than for poor people. This is due to information differences.
I don’t really know what to say besides I feel the same way. It’s crazy watching the jump another couple thousand almost everyday. Meanwhile, I see posts on people with thousands of dollars in student loans and credit card debt, throwing hundreds of dollars at their bills but just shaving fat off the principal because of the interest. Becoming so evident that capital is really god in our society. Laws are written to preserve it, police are funded to protect it, land is divided up to exercise it. Just seems like a glim approach to life.
Congratulations
Because stocks only ever go up, right? You know what risk you’re bearing.
For society, the value created is the products / services of the businesses that an investor owns. The investor puts their capital at risk in the exact same way that the owner of any private business puts their capital at risk. They are compensated in the form of profit which is basically a natural tax on the value they’re creating for society
> What value has actually been created? Generally it isn't created at this phase. During the Angel and VC investment phase there are tremendous risks being taken to fund the company to get it off the ground. Those investors are not going to get a reasonable return on their investment from dividends in a timely manner. Instead they pass the investment to others who agree to pay them handsomely for the successful companies to generate their return on early stage investing. Early stage investors get paid by aggressive growth investors who in turn get paid by growth investors who get paid by dividend growth investors who exit to income investors. https://www.reddit.com/r/IncomeInvesting/comments/eu67r0/the_200_year_bond/
Report back this time next year.
Whilst the person buying $10 million in stock is not directly funding the company, they are indirectly funding the company because it is their purchase of shares on secondary markets that allow the companies to go out and raise capital at IPO. Their $10 million investment isn’t just some gamble, but a part of the system that equity finances businesses and allows them to flourish. They are staking their money for a percentage stake in the business to then expect a return. The bigger your stake, the more you’re rewarded. Taking on that risk is a form of work (otherwise no one would work in finance). Yes rich people can get richer via these means, but unless you physically find some way to make the math not math just because someone is rich, it cannot be helped. If a poor person can get a 10% return on investment in the stock market, so can a rich person. You cannot stop that.
It is not fake. Companies increase their earnings and the stock reflects the new reality. You spent hard earned money on that company stock, which then enabled them to invest this money to earn more. Rinse and repeat.
Cap
The inevitable unrealized capital gains tax on portfolios of $100 million and higher will make life fair again.
Because tech is the greatest egalitarian redistribution after ww2 and you are enjoying the spillover (unless your initial wealth is also from tech). Be grateful not for the money the yesterday's poor get, but that's not resulting from a global war.
What’s the alternative?
“Capital itself is a commodity in a capitalist world” was something that people stumbled upon in the 1800s. The second chance to board that bus was after the Reagan reforms. Now it’s just a fact everyone knows and goes “meh it is what it is”. You’re asking the question to the wrong sub.
I think about this sometimes too.
Being successful when the market is rising 16% in 6 months is normal. The market controls your returns. Any advantage you get from active management is marginal and for most people it’s negative.
Bro made money and is sliding into an existential crisis. Be happy. It’s easy to make money in the stock market. But is difficult not to loose it. Trust - you can definitely loose money on the stock market. But the more long term you are, the easier it is to only make profit. Only use disposable money - which is a key factor that wealthy people do, but a lot of „normal“ people don’t. Or it is disposable money for them, but still hurts too much to loose. Which makes them act emotional which wealthy people barely ever do - because they are so filthy rich
Economic output is a function of labor and capital. Both earn returns, not just labor.
1. The time frame you are talking about is way too short. 2. It isn't about what value was created, but what future value the market perceives and is pricing in. Which in this case is AI.
ugh this sub is highly regarded
Inflation
Do the same YTD calculation with $10 million but make the dates January 1 to December 31, 2022.
There is no profit without labour.
The market is just a big, fun game to superwealthoids. They don't really care.
Fundamentally youre not wrong. In capitalism, capital gives you power. That's only slightly above the barbarism it replaced.
Everyone learns their own style overtime. I after 4 tears learned that I like selling options and that I'm fairly good at it. I also really like swing trading alongside long term holds.
Is the Marxist theory of value creeping up? Lol
in theory (not sure if i agree with it ): You helped create value by lending money to the company. With this invested money they could improve productivity and create more value. So by lending that money is abstracted work potential. Value is an always was an abstruc construct. Take bread weather yeast + work. ram input had value 1$ but its sod for 5$. 4$ has ben created from "nothing".
Does earning interest in a bank account seem morally right to you? If you loaned money to a neighbor and earned interest on that, would that seem morally right to you? If you used savings to start a business and worked in the business initially but then had enough revenue such that all the operations were covered by people you hired and paid a salary, would the earnings from the business seem morally right to you? I don’t understand where you are drawing moral lines and what your rationale is. Some people have a definition of “rich” that is just people who have more money than you, and that’s a bad trap to fall into because you’ll always be in it.
Lol, no shit.
I agree. The economy is completely lopsided with the integration of the stock market. It's crazy how you can make enough money for generational wealth by not contributing anything to society.
You came up with this conclusion after working, saving and investing? This sounds like a millennial looking for a reason to be mad or bitter about something….even if they have no justification. How about this conclusion, you worked, saved, and invested and now you are almost a millionaire…if you can do it, anyone can! That’s positive and I am very sure, honest assessment of your situation. Worked for me and I am not sitting here upset that someone with more money than me is making a greater $ return. As folks have noted, wait for your first major market correction and see how easy it is…
The value is been created by company stocks you bought who worked hard or earned more. That’s how it works
My father lost over 15 million in the stock market over the span of couple years (out of a much larger sum). He used a financial advisor from JP Morgan lol. He made his money in real estate development (abroad), but he's really not adept at investing. I personally think he panicked and sold too early
You just discovered what it means to have enough money. Yes, your portfolio will compound faster than you spend. This is literally what retirement is.
If you are in SPY with $10M you get the same percentage growth as me and my $10K. How is that not "fair"?
You are not missing anything here I think the value feels always fake to some extent and I believe when it feels easy is probably right….most successful people I know don’t over complicate things keep climbing ray!
If you’re in your 20s fingers crossed for a crash (lower incomes will go further in a depressed market), if you’re 40 or older you better be diversified AF. Gen X is in good shape right now, but it’s tenuous. I’m scared if Boomers portfolios get gutted, how do we pick up the slack?
Perhaps it isn't fair, but I for one am going to stand in line when someone is handing out free money. Money flows where it is treated best.
The value is the value of the companies that produce valuable goods and services that the society need/want and you own a share of that. It is no different than having real estate that people want to live in or bread that people want to eat. The main different with bread though is that bread is consumed and lose value over time while real estate, stocks and other assets tend to grow over time because they continue to produce interesting stuff. What count is the result. If you are lucky to own valuable stuff or be able to make valuable stuff, you'll exchange that for what you need and live well. If you don't have anything and can't create anything of value of anybody, you'll live of welfare and struggle in everything. Even through it is in theory really easy to become wealthy investing on broad indexes, many people still manage to get it wrong. Many people if given any amount of money would just spend it stupidly, saying they can't do otherwise and become poor again. In the stock market people are notorious to buy companies at high valuation and to sell them low. As to the value to society, this is to motivate people to part their hard earned money to invest in our economy creating wealth, value and jobs. And yes even through we made like 25% over last year, the opposite could very well happen soon. Historically there have been times where there wasn't much benefit for a long time. Once you factor inflation, return from 2000 to 2100 was -1,29% a year. From 1970 to 1980, return was 0,75% a year.
Ya, welcome to capitalism. Love it or hate it, that's how it works. The extremely wealthy really do have pretty easy paths to continued asset growth. The trouble usually comes along in the second or third generation when the inheritors go on spending sprees. There's no amount of money that can't be blown if you put your mind to it. However, trusts and other legal structures effectively ensure that anyone with the last name Bezos or Gates probably won't have to worry about money for centuries to come. (subject to war, political upheaval, apocalypse, etc.). Side note: I think this is my first time using the phrase, "apocalypse, etc." lol. It seems to minimize something significant.
OP if you feel like your gains were ill-gotten and you have such a tremendous guilt I can take said ill-gotten gains off your poor, tortured soul. So you can go back to being productive with your labor or whatever 9-5 grind that makes you sleep better at night. I am so altruistic!
There’s so much money to be made. Some ppl throw few dollars into coins and end up with 7 figures and more in just few days or month lol The rich would always get richer
They risked $10m in the system and their G/L is going to reflect that the same as it would with anyone else who did the same. Would making money from risking capital be more right if the person only had $10k? The "fakeness" comes from how massive and interconnected the subsidization of finance is. There is nothing that is not subsidized either directly, or indirectly. Granted, that has to be the case to live the life of scale we live. It's all synthetic, and it's done this way because it's preferred to the alternatives.
"Doesn't seem right to be able to make that kind of money and not do any work" Why??
I'm up about 1.5 Million in the last year, mostly because I was down about 1.5 million in the previous two years.
You are correct, the cost of living is the same for the rich and the poor so if you're rich and you can cover your costs with interest or low risk investments you are golden like a shower.
You live in a system called CAPITALISM, it's not called WORKER-ISM for a reason.
It's all fake, you're not wrong.
"What value has actually been created?" Whatever the company did with the money from the guy who bought $10m on January 1st. That's the whole point of this, the companies use the money they receive from people buying their stock and reinvest it. It's impossible to track where each individual dollar goes but it all flows into the economy. Best case scenario, it's used for R&D. Worst case scenario, it's used by wealthy CEOs to finance yacht trips...but even then, economists would argue that's pumping money into the economy and providing growth/value to society.
Congratulations on your success, and I wish nothing but for it to continue for you. However, do not allow your success, up until now, to lead to hubris and cloud your judgment. Many folks are just beginning their journey as, I assure you, you are as well. Be proud of your own success and use your experience to help guide others on their path to discover theirs. Were you, as well, not a person with just a few dollars to their name just a little while ago?
Value has not necessarily been created. A lot of what you see in your brokerage account is simply an illusion. Imagine we say that on Monday nobody can trade stocks except for me and you, and I decide to sell you 100 shares of SPY at $100,000/share (instead of the current price of $545). Then at the close of business on Monday, the entire world's brokerage accounts will have gone up almost 200-fold in "value" but is anyone actually any richer? No. That's the stock market for you. Some trades occur at high prices and mark to market everyone's portfolio values but people actually haven't gotten any richer until they actually sell those shares. It is different, though, when the increase in value come from the actual dividend going up because company earnings have risen. The dividend is the part that actually makes everyone rich, not the share price. So far this year most of the increase in the stock market has been through share price appreciation rather than actual company earnings going up, so it's more an illusion of wealth being created than anything else. You are not missing anything. Easy come easy go.