Key insights
- The author argues that the S&P 500 is a poor indicator of overall economic well-being because it primarily benefits the wealthy and doesn't reflect the financial realities of average individuals. The author also points out that most stock market transactions don't directly fund companies, but rather circulate among investors.
I see this over and over again and I’m frankly quite sick of people using the S&P 500 (or the stock market in general) and GDP as a gauge for how the economy is doing.
For the record I am not, currently, speaking from my personal experience here. I recently got hired at a company that pays me very well and I do not worry too much about my bills and I live in Maryland. For those of you who don’t know what that means, my cheapest electric bill (this year so far) was this month at $292. My average electric bill is around $350 (look up Pepco, these are 100% real figures). I also own my own house and make decent rental income from Airbnb. So needless to say I personally am doing very well as a millennial.
However, I am sick and tired of people using the fucking stock market as a gauge for how well people are doing. For those of you who have used this argument and are not day traders : How many of you use your stock portfolio to pay your bills? Food? Gas? Car insurance? Car payment? Rent/Mortgage? I’m sure very few of you do. You’d either be an idiot or desperate if you did. That alone completely shatters this argument but I’ll go further…
You do realize that the only time the money you invest towards a company is when they IPO right? 1 single day is the only time period where your money goes straight to the company’s pockets. Every day after that just goes to other traders who are selling you the stock, who then go buy other shares from other companies. So with that said, the money you invested just gets tied up in the value of that stock as the price ascends/descends. It is not circulating through the economy like you think it is. Why do you think the wealthiest individuals hold their money in assets? So that they keep the value for themselves. Same way that you and I do when we buy stock.
Also, publicly traded companies on the S&P 500 are owned by the wealthiest individuals! And even though your investment doesn’t go straight to their pockets, it allows those individuals to acquire larger and larger loans as the price goes up! We are literally transferring our own wealth to the rich through this fucked up vessel for them to get larger and larger loans for themselves. So the higher the S&P 500 goes up, the richer those individuals get… and you just gave your money away to someone who’s just going to jack up the prices on you later in the name of economic growth.
The stock market is no longer a vehicle to actually invest in companies they like or believe in their mission statement, it has become a casino because nobody is getting paid enough and people are desperate whether you’re working or your retired.. Seriously fuck this system and fuck anyone who thinks that just because the stock market is doing good that people should be happy. Capitalist economic metrics, indicators and policies are no longer representing the overall wellbeing of everyday individuals. For instance, The new technological revolution of AI will be great for the stock market but its side effects will leave people on the fucking streets. That is NOT how an economy is supposed to work. NONE OF THIS is how it’s supposed to work. There are policies and different economic strategies where things can get back to normal. Please stop succumbing to this absolutely absurd thinking. End rant.