Sure the power law holds in the stock market value ($), but you're confusing that it will hold with market returns (%) as well.

The rate of return (%) has been better for pension funds, IRA, 401ks invested in market wide index funds than the wealthy that have invested in active hedge funds. (This has been very true historically, especially net of fees.)

So it's fair to say that the wealthy have seen worse returns compared to the public. And that the public has seen the "lion share" of market growth.

The wealthy don’t just invest in hedge funds, they also have index funds and plenty of real estate. Also, pension funds don’t just have index funds, many are invested in hedge funds. At a certain level of AUM and intent the allocations become similar. It would be wrong to say the common man has suddenly outrun the wealthy, wealth continues to be highly skewed, esp given asset inflation.

Sure - agreed that I may have simplified a bit too much for the sake of illustrating the apples ($) to oranges(%) comparison u/thundergolfer was making.

Still, I highly doubt that the asset allocation of the median investor of the bottom 90% is similar to that of the median investor of the top 10% -- even if PFs have access to the same vehicles that HNW/FO have.

Wealth is definitely skewed. But, if you're willing to accept the wealthy have allocated more to HFs which have underperformed market, recently, it seems that the "common man" have outperformed by keeping it simple and letting their automatic biweekly 401k contributions go to VOO instead of some highly complex financial product.

EDIT: simplified wording