We hear it every day from President Trump: the stock market is at its highest value ever. The stock market continues to climb to record levels with stock prices soaring and those who own those stocks are making millions in the market. But then we see headlines like these:
“The Top 10% Own 80% of the Stock Market,” “The Richest 10% of Americans Now Own 84% of All Stocks,” and “Dow Hits 21,000, Trump Touts StockMarket Success.” I’m certain it comes as no surprise to you that the experts stood in line in the Fall of 2016 making horrific predictions of what the election of Donald Trump would turn United States economics into if he were to be elected.
It might come as a surprise to you that these numbers are NOT factual. (Who would think Mainstream Media would report to Americans fake news?) Let’s look at some “Dire predictions” and actual stock market results. Then will tell you who really invest in markets — and it ain’t just the Rich!
Predictions: Experts Aren’t Always Right
Remember the dire predictions from stock market experts during the 2016 campaign warning us all that the Stock Market would tank if Donald Trump won the White House? Actual REAL experts jumped into the fray with everything they had, foretelling the Trump gloom and doom:
- Mark Cuban. “I can say with 100 percent certainty that there is a really good chance we could see a huge, huge correction,” Cuban told CNN. “That uncertainty potentially as the president of the United States — that’s the last thing Wall Street wants to hear.”
- Erik Jones. “You would see incredible pressure on stock prices if Trump wins and everyone flooding into rare metals like gold and into bonds” in the U.S., Germany and the United Kingdom, Erik Jones, professor at the Johns Hopkins University School of Advanced International Studies, told Politico’s Ben White.
- Justin Wolfers and Eric Zitzewitz. “Given the magnitude of the price movements, we estimate that market participants believe that a Trump victory would reduce the value of the S&P 500, the UK, and Asian stock markets by 10-15%,” University of Michigan professor Wolfers and Dartmouth professor Zitzewitz wrote in a report that supposedly scientifically forecast the market’s reaction to Trump’s victory
- Andrew Ross Sorkin. The New York Times columnist and CNBC anchor wrote: “In all likelihood, a Trump victory would lead to a swift, knee-jerk sell-off. Many investors will choose to sell stocks and ask questions later.” In fairness to Sorkin he hedged his belief in the sell-off by writing: In truth, it’s impossible to predict how the markets would settle into a Trump presidency, despite the speculation on all sides. In all likelihood, it will take time for investors to truly make sense and “math out” how his policies would affect the economy.
- Lawrence G. McDonald of ACG Analytics hedged also, predicting a massive sell-off followed by a relief rally. “Trump will create a colossal panic, but the relief rally will be outstanding,” he told Sorkin. Well, he got the rally right, anyway.
- Simon Johnson, a former chief economist of the IMF, a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, The Baseline Scenario had perhaps the most panicked reaction, in keeping with his status as America’s most authoritative economists. “With the United States’ presidential election on November 8, and a series of elections and other political decisions fast approaching in Europe, now is a good time to ask whether the global economy is in good enough shape to withstand another major negative shock. The answer, unfortunately, is that growth and employment around the world look fragile. A big adverse surprise – like the election of Donald Trump in the US – would likely cause the stock market to crash and plunge the world into recession,” Johnson wrote on October 29, 2016.
- Ian Winer, Bridgewater Associates, Tobia Levkovich, Macroeconomics Advisors are all proven stock market experts who each projected dire economic happenings in U.S. and World financial markets if Donald Trump was elected president in 2016.
Would you like the “Rest of the Story?” Here are the results that ALL of the experts failed miserably to predict that certainly cost many Americans opportunities to pocket huge stock market profits:
Dow Close 11/7/2016: 17,888.28
Dow Close 7/18/2019: 27,222.97In the midst of all the pessimistic projections by the above experts and many others, let’s compare the Dow numbers close the day before the 2016 election with today’s numbers. I’ll warn you: They’re not quite what the experts told Americans the results of a Trump victory would look like. Trump’s election instigated a Dow Jones increase of 9334.69 points or 52.2%.
How does that interpret into real dollars? a $50,000 investment in the market the day before the election — 11/7/2016 — would be worth $76,000 on 7/18/2019.
With all of this success the U.S. stock market has had, why is it only the rich and super-rich in the United States that can invest in stock markets? After all, 2020 presidential candidates Elizabeth Warren, Corey Booker, Joe Biden, and others have made demeaning all those rich white millionaires and billionaires a fundamental in their campaigns. It’s just not fair! They have presented to Americans multiple promises to make multiple important parts of Americans’ lives free: free college, free healthcare, government payoff of all college tuition loans. Free, Free, Free!
How can the government pay for all of these programs? Simple: just tax those super-rich Americans who get richer and richer simply by having investments in the stock market.
Guess what: that will not work. The super-rich collectively don’t make enough money that if all was confiscated by the federal government would pay for these programs. Besides that, the money pot to which those billionaires owe their financial success to — the stock market — is NOT a party-place of the super-wealthy. What 2020 Democrat candidates are preaching to America about the stock market and the evil rich is not the truth! The wealthy don’t fly solo when it comes to stock market investing. There are others who benefit from market investments if not to the same level as the wealthy stockholders, almost the same.
So If Not Just Millionaires Who Invests in Stocks?
In 2018, 55 percent of adults in the United States invested in the stock market. While that is a slight increase from the last two years, it remains below the levels before the Financial Crisis, having peaked at 65 percent in 2007.
It’s easy to think that the stock market is the playground of hedge funds and day traders, but in reality, most of the stock market is owned by the average joe. In fact, the largest chunk is doing one thing: helping people retire. In a white paper, Steven Rosenthal and Lydia Austin of the Tax Policy Center have broken out exactly which kind of investors own the stock market. They found that a majority of corporate stock is owned by different types of retirement plans, the largest being IRAs and defined-benefit plans. Of the $22.8 trillion in stock outstanding (not including US ownership of foreign stock and stock owned by “pass-through entities” such as exchange-traded funds), retirement accounts owned roughly 37%, the most of any type of holder.
Labor Unions
If the stock market is so risky, then why does virtually every union pension fund in America invest the bulk of their assets in the “risky” stock market? Gone are the days when America’s major union pension funds invested most of their money in Las Vegas and Atlantic City. They are doing the smart thing by investing workers’ pension funds in real assets that will grow in value over time and be there when its time to pay workers’ retirement benefits.
According to the Federal Reserve, state and local government employee pension funds alone have nearly $3 trillion in assets, 66 percent of which is invested in corporate equities (i.e.: stocks). Indeed, 30 of the nation’s 50 largest pension funds are public employee pension funds. According to Pensions and Investment Magazine Online, these 30 funds have $1.5 trillion in assets, 60 percent of which is invested in the stock market. Remarkably, 13 percent of their assets are invested in foreign stocks. So much for “buy American.”
Most of the trade unions have made similar investment decisions:
- The Western Conference of Teamsters Pension Trust has 40 percent of its $22 billion in assets invested in domestic stocks.
- The United Mine Workers Retirement Fund has more than 44 percent of its $7.5 billion in assets invested in domestic stock and 8 percent invested in foreign stocks.
- The Bakery and Confectionery Union Pension Fund has 57 percent of its $5.2 billion in assets invested in domestic stocks and 7 percent invested in foreign stocks.
How about federal employees, who can choose where to invest their money through the Federal Thrift Savings Plan – the government workers’ version of a 401(k)? The TSP now has more than $85 billion in assets, 59 percent of which is invested in the stock market. Although federal employees can also choose to invest in government bonds, they’ve chosen to invest only 5 percent of their TSP funds in government bonds. Meaning, when given the choice between the stock market and government bonds, federal employees overwhelmingly choose the market.
The value of U.S. pension funds at the end of 2015 was $21.7 trillion. The funds’ managers prudently manage assets in a method meant to ensure that retirees receive promised benefits. For many years this meant that funds were limited to investing primarily in government securities, investment-grade bonds, and a small amount placed in blue-chip stocks. Changing market conditions and the need to maintain a high rate of return have resulted in pension plan rules that allow investments in most asset classes.
Summary
Facts matter, don’t they? All of these facts take us to the point we surely are asking collectively, “Why are Democrats telling the nation over and over that the super-rich ‘OWN’ the stock market and that average Americans have no part of the investment products those billionaires are using to get rich?” The answer is simple: Democrats for all the freebies they have previously, are now, and will in the future promise to those who vote Democrat require massive amounts of new money not from just Democrat voters, but ALL Americans to fund. How does that funding occur? Through tax revenue to the federal government. How does the government get that revenue? Confiscation from Americans and American companies. So they target the most wealthy, painting wealthy Americans as “evil” Americans who are greedy, selfish, and oblivious to the lives of average Americans.
The truth? Democrats in Congress are oblivious to the needs of average Americans!
Democrats during every election cycle concentrate on two things: the demonization of conservativism and conservatives, and the best way to find voters who will give them power so as to maintain control of as much of government as possible.
Democrats all know how important the stock market is to Americans in every financial classification. They know most Americans have stock market investments through their employers on which they rely for retirement. They spin the lie to denigrate wealthy Americans so as to justify increasing taxes.
How good and fair is the stock market? How evil are Democrats for screaming that Americans who make money through stock market investments? I close today with a tidbit of factual information that illustrates Democrat Party lies. Read this and decide for yourself:
U.S. Sen. Elizabeth Warren (D-Mass.) invested as much as $100,000 in the stock market the day after billionaire Republican Donald Trump won the 2016 presidential election.
Warren, a progressive standard bearer who recently held a town hall on income inequality in America, purchased between $50,000 and $100,000 worth of shares in the Vanguard 500 Index Admiral (VFIAX) fund on November 9, 2016, according to financial disclosures filed with the Senate Clerk. At the time of Warren’s investment, VFIAX shares were trading around $200 a share; at publication time of this story, those shares were trading for more than $250 a share. Warren’s capital gain on the investment could have been as much as $25,000.During the campaign, Warren sharply criticized Trump’s economic plans as unfair to the poor and overly favorable to the wealthy.
Hypocrisy in the Worst Way!
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