The largest stockholding entity in the state of California is CalSTRS (California State Teachers' Retirement System); the holdings[0] represent the 11th largest retirement fund in the world[1].

[1] https://www.calstrs.com/investments-overview

[0] https://www.pionline.com/article/20170904/INTERACTIVE/170839...

Definitely no. The popularity of 401k plans and as such makes the fortunes of many middle class Americans directly tied to gyrations of Wall Street.

The median 401k balance for 40-49 year olds is $36,000 [0]. These are adults who, for the most part, have never had access to pensions, only to 401k plans. They are about midway between entering the workforce and retirement. They, as a group, are nowhere near prepared to retire. Ever.

A booming stock market is irrelevant to most Americans.

[0]: https://www.nerdwallet.com/article/investing/the-average-401...

This gets thrown around a bunch in personal finance forums as well, but its a bit dishonest IMHO- it saying that the avg balance for a 401k account is 36k, not that the average balance across all 401ks account for an individual is 36k. Considering the typical tenure these days is around 2-3 years, this makes sense. Most people it seems don't really consolidate their 401ks.

That article also says that the average isn't a useful measure, but I feel it likely is more useful than stated as everyone has a capped contribution amount. There are some outlying scenarios where you can contribute more, but those are far from typical.

It seems there are a bunch of ways to fudge these numbers- I have a roth and a standard 401k- these are likely counted as 2 separate accounts, thus painting a much bleaker picture of my overall financial health.

More than one-third of Americans who work full-time have no access to pensions or retirement accounts such as 401(k)s that derive their value from financial assets like stocks and bonds. The percentage of workers covered by generous defined-benefit pension plans has declined from 62% in 1983 to 17% by 2016. While some economists consider an increase in the stock market to have a "wealth effect" that increases economic growth, economists like Former Dallas Federal Reserve Bank President Richard Fisher believe those effects are limited. Make no mistake the stock market only benefits the upper class, and quite disproportionately so.

https://www.nytimes.com/2018/01/22/opinion/bull-stock-market...

Only if you are 60 and about to retire does this matter. Not like a 20-50 year old will tap into their 401k, and not like they have too much saved in these funds to begin with. Most of the middle class with retirement plans will ride this out like they did the last recession and every one before that. They might have to hold off on buying a new car for a year or three, but they will be fine when the business cycle rights itself again.

The people working 60 hour weeks comprised of 3 part time jobs that refuse to pay out full time hours and benefits just to share a bedroom in south LA while accumulating zero savings? These people are about to experience real pain, and news coverage and forums like HN generally have no concept of the working class.

60 percent of Americans have their fortunes tied to the market via direct investment or retirement funds. The government also finances a lot of its pensions via the market.

> high stocks only benefit the top 10% of society, and are a useless indicator for the vast majority, who have little to no holdings.

This is absolutely not true. Most pension plans are at least partially invested in stocks.

Agreed. In addition to pension plans (most government employees), all 401K plans invest into stocks/indices. That's a huge chunk of regular middle class people throwing money into the market. Just because some people don't actively day trade, it doesn't mean that they're not affected by stock market.

Also, increasing stock prices are usually a key component of corporate finance, which will yield job growth, or promotion, or investment inside the firm, which are all good for employees. Even if much of the wealth generated directly by stock increases happens for the owners of the company, it enables the company to operate.

And what percentage of the poorest 50% of Americans have even $5,000 in any kind of retirement savings?

"More than one in five (22%) Americans have less than $5,000 saved for retirement, and 15% have no retirement savings at all. That’s an improvement from 2018 when 31% had less than $5,000 saved and 21% had no retirement savings at all."

Source: https://news.northwesternmutual.com/planning-and-progress-20...

With platforms like robinhood, and the trend toward lowering the bar to investment, even people like me ( <3% of income is "disposable" (which in and of itself probably isnt true as I have student debt)) can start doing SOME investment. Ive been poor my whole life, and have made a point since my teens to keep savings. Only recently did I begin investing however. This is a result of benig surrounded by people who don't make enough money to buy the things they do. Everyone has a choice of how to spend there money. To pretend the 12 bucks you spent on PBR and cigs is a better way to spend the money than to put it towards savings is the crux of the problem according to my personal experience.

> To pretend the 12 bucks you spent on PBR and cigs is a better way to spend the money than to put it towards savings is the crux of the problem according to my personal experience.

Expensive habits are terrible for your personal finances. I like to look at habits like that in a weekly, monthly, and yearly cost. Seeing that a $40/week habit is $2,080/year really helps me put my spending choices in perspective.

I'm curious by how you define being 'poor' since you say you had savings as a teen.

When I was a teen, being poor meant that even if you put that $12 away for another day, it'll just be used the next day to fill your tank. It's not really saving money if you're just putting off buying gas for your car.

My concern with something like robinhood is that many people treat investing like gambling without realizing it until there is a down turn and the money they saved for years is wiped out.

And what percentage of those people are not bottom 50% by the time they retire? Wealth is not a lifetime static number.

It's easy to google median wealth by age and see how people add wealth over a lifetime.

Nice goalpost shift. The original poster claimed that only 10% benefited. How did it change to 50%?

Well 52 - 60 percent of Americans own stocks so more (probably a good amount more) than 2 - 10 percent of the bottom fifty percent must own stocks, directly or indirectly

As of 2016, according to NASRA, pension funds on average had 48% of their holdings in stocks.

And the pension market is ~140% of GDP. So that's a lot of cash in stocks. Too much if you ask me, but I'm just an engineer.

You can't REALLY believe that only the top 10% of wage earners in the United States own stocks, right?

Please tell me you're just parroting something you heard and you don't actually think that.

A once-every-three-years study by the Federal Reserve Board found that in 2016, 51.9 percent of families owned stocks, either directly or as part of a fund.

https://www.federalreserve.gov/publications/files/scf17.pdf

That 10% number has certainly been making the rounds, almost like a talking point. However, that’s literal nonsense.

> People are finally starting to notice and point out.

Incorrectly.

Every person in America with a pension or a retirement account has significant exposure to the stock market. Universities and their endowments, which make institutionally awarded need based financial aid possible directly benefit from the stock market. Casualty (and other) insurance companies directly benefit from the stock market which affects their profitability and thus their ability to write policies at reasonable rates; it also affects the reinsurance market which can mean the difference between a large housing development being built or not, or a new industrial plant opening or not.

This “only benefits the top 10%” talking point is so ridiculous as to not be worthy of comment, but since it keeps popping up from people who have a political interest in talking down the economy, it should be addressed before more people actually start to believe that tripe.

The origin of that “10%” number was from a CNBC report that said “the richest 10% own 85% of individually traded stocks.” However that statistic conveniently excludes mutual funds — which generally consist of a basket of individually traded stocks packaged together. So if I own $1 million in a Fidelity mutual fund, I am not considered as owning “individually traded stocks.” So, to use that “only benefits the top 10%” number, then that would say that the stock market doesn’t benefit me because I only own shares in a mutual fund. Which is complete baloney.

When Trump calls out fake news, this is exactly the kind of thing he’s referring to: a statement that a rising market only benefits the top 10% because they own 85% of individually traded stocks — while that is completely false because everyone that owns shares of a mutual fund (the majority of American families in fact,) doesn’t benefit.

And your statement “the vast majority” don’t own stocks, that’s also a lie, according to Gallup: https://news.gallup.com/poll/266807/percentage-americans-own...

Even if Gallup was off by 10%, which would be a huge margin or error, that’s still nowhere close to a “vast” majority. Now to be fair, you did stick in a qualifier there “little” but that is meaningless. How much is “little?” And how do you know how prevalent “little” vs. “none” is? It’s just a meaningless distraction to protect against the fact that the majority of Americans own stock and even those that don’t own stock benefit from a good economy. Very low unemployment means tighter labor market which means wage competition.

It would seem that the economy could be absolutely perfect but those of different political stripes would be wishing its downfall just to win an election. Didn’t Bill Maher or one of those hosts actually wish for a recession so it would make it easier to beat Trump? Some sick people that would wish for people to lose their jobs and homes in order to beat Republicans.

We can have honest policy debates. But let’s not trade in misrepresentations to win political points.

I think there's a bit of talking past one another here. Certainly the many Americans who have retirement plans benefit from stocks increasing, as do the very wealthy who own large shares of stocks in non-retirement earnings.

However, the context of the discussion is over what term.

The markets are subject to boom and bust cycles. Over the 40 or so year term of retirement plans, there's not a whole lot that a 20 or 30-something can do to benefit from a clearly bull market.

I know that day-to-day, I'm not wealthier or better off because the stock market is doing well. My paycheck doesn't change. I can't sell any stocks to cash in.

And that is the context of the discussion: not that over the long term stocks go up and when you retire you reap the benefits, but rather that over the short term, 90% of the people don't suddenly get enhanced quality of life because the stock market is doing well.

I mean a good stock market makes it easier for companies to raise funds and thus to expand and employ more people. The purpose of the stock market is ultimately not to provide and asset class so much as it is to ease raising large amounts of money companies need to grow.

When companies raise funds, are they generally expanding and hiring these days or buying back their own stocks? Workforce have been shrinking for probably 100 years. Trickle down is fantasy.

Why the hell would companies sell their stock to raise money to buy their own stock again? That doesn't make sense. If they want to do stock buybacks they just borrow money to do it, but only if interest rates are low enough. In most cases when companies raise money by selling stock you can bet its to expand, by making capital investment, raising headcount, acquisitions, etc. Either at that moment or the near future.

One thing to consider is that the price of the markets are based on holders NOT selling. Its fundamentally impossible for the majority of holders to actually hold the wealth if the majority of holders sold their stock. Kind of a conundrum if you ask me... Market price is only real money if you sell, and if the majority (or even a sizable portion) of holders sell, the value of the shares will decline thus put the majority of holders underwater...

Ummm what are pension funds?

Less than 13% of US private sector workers participate in pensions plans[0].

[0]https://www.pensionrights.org/publications/statistic/how-man...

You're not including the defined contribution retirement plans, which are a vehicle for investment.

N.B. I believe 'pension' ≡ 'defined benefit' is an American English thing, which may the source of the confusion. I, my employer, and my provider refer to my private, defined-contribution plan as a pension.

Correct, we do have legal US definitions which makes pensions different than DC Plans.

Nearly 22 million people work for the state, federal, and local governments, nearly 20% of the active workforce.

https://www.bls.gov/oes/current/999001.htm

Okay so adding those numbers with the private sector ones you still get that the vast majority of American's aren't benefiting.

You’re also forgetting all the people without pensions, but with IRAs and/or 401ks. And then the many more with brokerage accounts. And young people seem to have jumped headlong into Robinhood.

I don't know if I'd characterize 66% of Americans (100% - (public + private)) the "vast majority"...

However less than 2.3% of hourly workers (not total workers, but hourly workers) make minimum wage, yet those that claim a good stock market doesn’t benefit most people would argue fiercely over minimum wage which affects only a tiny fraction of workers. So we should be applauding something that benefits “only” 13% of the workforce (though that 13% number with pensions is misleadingly low as pointed out by other comments.)

Indeed, "what are pension funds"? I don't have a pension. No one I know personally has a pensions. The younger or non-tech people I know have little to none in their 401k.

I entered the workforce about 10 years ago and I genuinely don't even know what a pension is. I know what a retirement plan is, and employer matching. I guess a pension is something different from that.

A pension is a plan where your employer promises to pay you money _after you retire_, in perpetuity. In the "olden days", or when working for the government, one often would work at the same employer for 20+ years, and a pension is a way for that employer to support you. (My dad has multiple pensions from when he worked at a large company, and then later for the local county government.) In general, it scales up the longer you worked for a company. This was back when companies and employees were "loyal" to one another.

That seems to be a lot less common now.

https://www.investopedia.com/ask/answers/100314/whats-differ...

When people say "pension" at least in the US they usually mean a defined benefit retirement plan, i.e. you get $X/month based on salary and years of service starting at age Y.

By contrast, a 401(K) is a defined contribution plan. You put however much money in, maybe get matching, and you can take money out after a certain age based on how much you put in and how much it grew.

Defined benefit used to be a lot more common but it's become less so for a variety of reasons including tax law changes. Today you see them mostly in government jobs like teachers.

Worse, many of those with pensions find themselves one day without one... Look at the hundreds of bankrupt orgs that have somehow, been able to simply walk away from their obligations. The only people who hold pensions these days are govt workers. People who do not contribute to the economy.

Don't know any state or federal workers? Traditional pensions are still offered by about 84% of state and local governments. That's cops, teachers, etc.

FYI - California teachers do not pay into SocialSecurity. Their pension is 100% on the backs of the tax payers of CA. Market performance is irrelevant as their pensions are paid regardless of performance.

Market performance is only irrelevant as far as the amount the retirees see on their checks -- it's relevant to CA taxpayers because the money has to come from somewhere if the market underperforms.

Yes, that was my point. The market investments are not what is driving the pension's long term value. The underwriting by the state is what makes it valuable. The markets are simply an avenue for growth, or as was the case in the past, losses...

I know a teacher but she still has a few years before she'll be eligible.

Which is one of the reasons that pensions fell out of favor for employment in the private sector. They were traditionally very oriented towards long-term (a decade or more) employment with a single company. With typical employment in a lot of sectors--certainly including tech--a large majority of workers would basically end up getting little or nothing out of a traditional pension.

No one in tech has a pension.

Some people I know who are programmers for a defense department company have pensions, 401ks, and bonuses.

That is mostly true but not categorically so. I'm in tech and have one, albeit from an older company that's no longer around.

ITT: Americans, Americans everywhere.

this

Pensions as we know them won't exist in five to ten years.

Those of us under 30 never knew them either.

And most never will. The ones left are awful and full of restrictions, and can be taken away at any time for any reason, even if it's illegal in your state.

Could you elaborate please? Genuinely interested to hear your take.

No unions and privatizing government jobs = no pensions.

And any workers who plan on retiring