For over 40 years now I’ve been a stock-market investor ever since I became an income-earner in life from the age of 25. And I have prided myself on being a prudent and honest investor, quite happy with the returns gained and with the nest-egg I’ve built for myself and my spouse in the sunset years of life we both live today. And, hopefully, by the time I depart from this world I shall leave behind for my two children too a modestly sized inheritance of a portfolio of value-stocks carefully accumulated, by the hot sweat of my brow, over 5 decades.
I must say that my stock-investor experience in life has been a reasonably happy one… Nothing to complain at all.
I am a little apprehensive though that a certain element of guilt-feeling is now about to threaten to creep into my state of hard-earned, stock-market induced sense of personal and bourgeoisie happiness …
I came across this Infograph here below this morning and I suddenly find it disturbs my ageing conscience as an ordinary retail stock/market investor. I was really not aware that just 1.5% of all stocks have generated net wealth in global markets over the past 30 years!!! The rest of the marketplace is no more than fluff, frippery and flimflam…
I’ve grown up in life always thinking that investing in stock-markets was in many virtuous ways a kind of democratic participation in the economic life of my country . By actively buying and selling in it I along with thousands of my countrymen was myself making a very small but not insignificant contribution to the general economic development and nation-building of my country. That belief also convinced me the cliche of the bourse — that it was an agency through which the greatest good for the greater public interest could be realised— was indisputable truth.
Not true… now says the above Infograph!
In the last 30 years, according to the chart, if one were to imagine the global stock as busy marketplace where, say, about 65000+ firms had their respective stocks bought and sold by investors worldwide, only 2.5% of them , no more than around 1200 of them, really did generate any significant Wealth for them!
To truly understand the implications of above fact we also need to keep in perspective that Global wealth is estimated to be around 510 trillion euros ($575.5 trillion) in 2020… and out of that, the wealth in terms of global stock-market capitalisation in the region of c. $117 trillion. So, if we did a bit of maths we will end up reckoning that it is the minuscule number of stock-owners of about 1200 firms in the global stock-marketplace who can account for and represent close to 20% of global wealth! That minuscule number of stock-investors globally is what constitutes the privileged class of people that the rest of planet earth knows today to be the “ 1 per-centers of the world”… the super-rich billionaire club .
The world today suffers today more than anytime ever before in human history from glaring Income and Wealth Inequality and Disparity.
Please read more revealing analysis here https://www.downtoearth.org.in/news/
My country India, in whose stock-market growth I have been participating all these years, stands out in terms of income and wealth inequality, claimed the World Inequality Report 2022.
Per capita annual earning of the bottom half of our country’s population was Rs 53,610. Someone among the top 10 per cent earns, meanwhile, makes 20 times that amount. The top 1 per cent held more than a fifth of the national income while the bottom half accounted for a mere 13 per cent — and this share has been reducing for some decades.
India’s wealth distribution also signals how fast inequality is growing. A household here, on average, had wealth worth Rs 983,010. But the general wealth held by the bottom half was “almost nothing” at Rs 66,280. That’s just 6 per cent of the Indian average. Across the world, as in India, it is this “bottom-half” group — in America they are called “99 per centers” —- that is deprived of wealth or capital to inherit.
Global wealth is now concentrated in the hands of a few private individuals and investor institutions. They have, effectively, become the economic rulers of the world.
If an inheritor of wealth today belongs to the poorest half of the world, his or her income is half of what his or her ancestor in the same population group would have had, way back in 1820. On the other hand, the world’s richest 1 per cent now control more than a third of global wealth generated since the 1990s. In fact, the number of billionaires rose to new records in 2020 — the year of the pandemic.
Thus, the inheritor of wealth today — my children and yours— as well as the ones in the generation that will succeed us, will be convinced that “the rich are getting richer and the poor are getting poorer”…
I realise today in the evening of my life that my investing experience has been a rather charmed one throughout the last half-century. The stock-market has certainly not helped me amass wealth . But at the same time it certainly has helped me and my family to weather the storms and vicissitudes of individual human existence… I belong to a privileged class of people on earth …. the 1% Club that in the last 30 years has thrived quite a lot upon wealth generated by no more than 1.5% of the number of firms in the global stock-market place.
How do I feel today about it all?
I confess my feelings are rather mixed… The stock-market is an undemocratic plutocracy in a country such as India where 200 million people struggle with poverty and thrice that number struggle to lift themselves out of low-income and hence low-wealth trap… and India prides itself as a great Democracy — the worlds most populous and perhaps the truest too … What an irony!
So, if you asked to tell you how I truly feel… what can I say? Honestly, I feel like I’ve been fortunate all these years to have been able to invest in a gigantic casino bingo-machine called the stock-markets … bingo-machines of the wealthy, made by the wealthy, for the wealthy.
Sudarshan Madabushi