Markets and Inequality: What Goes Up Must Come Down?

In our October’s Spreading the Wealth? Market IS Doing It! we averred that falling markets have been reducing the net worth of the richest. This has possibly been closing much of the controversial “inequality” gap.

We’ve got some interesting charts from the Economist….

Fabulous "inflationary" driven booms almost equal horrendous "deflationary" bust.

According to the Economist, ``INVESTORS are told that the value of their shares may go down as well as up. Rarely, however, do they plummet as far as they did in 2008. The total return of the S&P 500 index fell by nearly 40% last year, the second-worst performance by America's stockmarket since 1825, according to calculations by Value Square, a Belgian asset-management firm. Comparisons to the Depression are clear: only in 1931 and 1937 were there similarly abysmal losses. The firm looked at various predecessors of the S&P 500 from 1923 onwards, and for earlier years took data from a working paper by Yale Management School on the returns of companies listed on the New York Stock Exchange. Since 1825, 129 years saw rising returns, whereas 55 suffered falls—four of them in this century.”

And since stock market exposure is highest with those from the upper income strata….

Courtesy of Investment Company Institute

Apparently falling markets hurt them more, where according to the Economist,

``Over a third of American millionaire households said they lost at least 30% of their net worth since September, according to a new report by Spectrem Group, a financial consultancy. Property, mutual funds, shares and annuities took the biggest knocks. Unsurprisingly, financial advisors are under more scrutiny, with satisfaction levels falling from 60% earlier in the year to 40%. A majority of the wealthy say they may not be able to support their lifestyles and nearly 20% will delay retirement.”

Liberals must be enjoying these…