High concentrations of the stock market has been around since forever:
> Jason Zweig once shared that AT&T made up 13% of the U.S. stock market in the early-1930s. General Motors was 8% of the market in 1928 and IBM had a 7% weighting in 1970 (it was close to that again by 1985).
That's a really interesting observation. My knowledge on the history of finance is woefully inadequate, but stocks seem to be another concept that was popularized very late.
Isn’t this kind of the story of the stock market writ large though? I don’t recall the exact number but some researcher found that like 95% of the net gains in the market are attributable to less than 5% of companies.
I wonder what makes them think the stock market is overvalued. Increasing inequality combined with market saturation and the current difficulty to start a competitive business means it makes perfect sense that stock prices are historically high. Combine with the fact that passive index investing has become the norm, and it seems like it will be a new normal.
Or, it could just be that far more people are investors today than there were in 1929. According to this site, only about 10% of Americans owned stock or speculated in the markets in 1929.
>In fact, only approximately 10 percent of American households held stock investments and speculated in the market; yet nearly a third would lose their lifelong savings and jobs in the ensuing depression.
Yet, this poll seems to indicate that around 55% of Americans now hold stocks.
>Thus far in 2020, Gallup finds 55% of Americans reporting that they own stock, based on polls conducted in March and April. This is identical to the average 55% recorded in 2019 and similar to the average of 54% Gallup has measured since 2010.
So if slightly more than one out of every two people you meet owns stocks, I would assume you're bound to run into a lot of people talking about stocks.
I agree. Meanwhile, the IBM stock is up 1,320% since 1993. At one point it was nearly 2,000%.
That's the problem with playing the stock market: you've not only got to be right, you've got to be right at the exact right time or you'll get slaughtered.
I didn't downvote you, but you're wrong for a huge variety of reasons.
Firstly and most importantly, the stock market is not zero-sum.I don't know why you think it is.Equities in companies ideally (and historically) grow in real value.This is basic common sense.If your friend sells you a stake in his company, you have an ad-hoc stock market (a buyer and a seller for company equity). Is one of you destined to lose in this deal? Or can the company do well and you both succeed?
What's going on with HFT is not a novel way to exploit the system. Financial pros will always get the information sooner and be able to act on it more quickly/efficiently than retail investors. People who suggest otherwise are deluding people for political purposes. Before computers existed, people on Wall Street still got the information first and acted on it first.
What computers have done is made the whole thing quicker and more convenient. If you want to fill an order you are much more likely to be able to. Those advanced algorithms help make sure things are correctly priced which is good for buyers and sellers. The companies looking for investment benefit from this. The smaller investors aren't hurt by this at all from this, assuming they are trying to invest in value and not take advantage of arbitrage opportunity.
Contributing liquidity and pricing information to the market is valuable. Some people do it faster and better than others and so they profit from it. It's unclear to me why they need to do a worse job of it so that other people can share in this value. Should Google be limited to only providing so many search results a day so that other small(er) search engines can get some of the wealth too? What exactly is the problem, besides the general popularity of banking fear-mongering recently?
People are significantly more exposed to the stock market these days than in 1910.
Considering tons of people's 401k's are basically made up of the biggest companies in the US thanks to index funds there is a lot of incentive to not fuck with those companies.
If any leaders gets really serious about breaking up some of the Big Tech companies you'll see enormous pressure to get them out of office ASAP.
I also think this has an impact on inflated asset/stock prices:
The total number of U.S. exchange-listed companies peaked near 8,800 in 1997 and has since sunk to 4,900 as of year-end 2012, according to data furnished by Strategas Group.
The top 1% in American own more than 50% of the securities. Using the stock market as any sort of proxy for aggregate quality of life for all Americans is like saying "Everyone must be doing great, caviar sales are through the roof!"
Yeah but stock market isn't zero sum... I can't tell if you're actually arguing don't invest in stock market because some HFT might get higher returns or some index fund will get .05% (somehow forgetting your 7% or even higher recently annual gains). Or perhaps you're trying to illustrate someone else's (wrong) mindset.
> Jason Zweig once shared that AT&T made up 13% of the U.S. stock market in the early-1930s. General Motors was 8% of the market in 1928 and IBM had a 7% weighting in 1970 (it was close to that again by 1985).
* https://awealthofcommonsense.com/2023/05/concentration-in-th...
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