Higher stock prices help Americans regain wealth

[Omaha Steve]

Source: AP-Excite

By CHRISTOPHER S. RUGABER and DAVE CARPENTER

WASHINGTON (AP) - A jump in the stock market and rising home prices are bringing Americans closer to regaining the wealth they lost in the recession.

U.S. household net worth dipped in the April-June quarter, according to a Federal Reserve report released Thursday. But gains in stock and home equity since the last quarter ended have likely raised total household wealth to within 5 percent of its peak before the Great Recession.

Millions of Americans still feeling the effects of the housing bust, or who don't own any stocks, haven't benefited as much.

Still, the increased overall wealth could give many people and businesses the confidence to step up spending and boost U.S. economic growth and job creation. That's a key goal of the bond-buying plan the Federal Reserve unveiled last week. The Fed hopes to drive interest rates down and stock prices up.

FULL story at link.


Read more: http://apnews.excite.com/article/20120920/DA1DP62O0.html

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In this Thursday, June 7, 2012, file photo, Federal Reserve Chairman Ben Bernanke appears on a television screen on the floor of the New York Stock Exchange. Americans' wealth dipped about 0.5 percent in the April-June quarter as a drop in stock prices more than offset a gain in home values. Yet since June, a resurgent stock market has jumped about 7 percent; more than reversing last quarter's 3 percent drop in stock prices. (AP Photo/Richard Drew, File)

[Demeter]

1. Well, good for the 1%

Too bad the rest of us don't even own stocks...it being a luxury far beyond the reach of minimum wage earners...or even median wage earners. Or any one that eats and drives a car in the same week.

[HoneychildMooseMoss]

2. There certainly aren't any stocks in my puny portfolio

The only time I dabbled in the market, I was burned big time. Once burned, twice shy

[slackmaster]

29. On the brighter side, people who don't own stocks didn't lose value when the market crashed

My paternal grandparents never invested anything in stocks during their entire lives. They were both easily old enough to remember the crash of 1929.

They did well enough on two salaries, working most of their years in a state mental hospital.

My main retirement accounts got HAMMERED. The recent run-up in stocks has put me about back where I was in the middle of 2007. I stayed the course, didn't panic and sell low.

[Meandering1]

8. Exactly. We worked our way out of the Great Recession

and Wall street takes home all the profits.

[BlueMTexpat]

12. Anyone who has a job that includes any sort of

retirement benefit (pensions, 401-Ks, mutual fund savings plans, etc.) likely does own stocks, albeit not directly. This is why so many retirees found themselves suddenly impoverished in 2008-2009. It is in all our interests to see value return to the stock market, so long as that value is actually based on good economic indicators and not mere speculation intended only to benefit the one percent.

The tragedy for US workers is that so many are working at minimum wage jobs without ANY benefits at all, thanks to success in union-busting and the passage of "right-to-work" laws in many states that were specifically designed to have people literally work for peanuts. This MUST change.

What I love is that the market has been increasing in value especially since the end of the Dem convention. Yes, I realize that there are lots of other reasons for that increase and timing could be considered coincidental.

But if the re-election of President Obama is such a "bad" thing economically, isn't it interesting that economic indicators have been looking more optimistic since he has begun consistently trending upwards in the polls?

As Bill Clinton says so well: "Arithmetic."

[dmallind]

19. Even after this recession about 40% own stocks - used to be over 50%.

[oldsarge54]

3. Seems to be a common thread

How many people with incomes under $250K a year hold significant stocks. For most people's wealth below that level is in their home's equity.

[Kolesar]

14. My wife and I do

We have enough money to finance an "early retirement" before collecting Social Security. We are going to travel, garden, and work on habitat protection.

I got here by studying all day and spending all night in the university computer center.

[oldsarge54]

15. I'll rephrase

Perhaps I stated that inelegantly. (By the way, congrats and well done, sincerely), not many people in the under $200K income level have that significant amount of stock.

[HankyDub]

4. hilarious!

yup, all those people who lost their jobs and their homes are getting RICH in the stock market!

[Kingofalldems]

5. So what are the 1% complaining about?

[cstanleytech]

6. Raise your hand if it helped you. Anyone? Anyone? Anyone at all?

Last edited Thu Sep 20, 2012, 10:31 PM - Edit history (1)

Anyone in the back? Anyone? Anyone?

[Jimbo S]

7. My 401-k is back to where it was

I don't own stocks directly, but through the mutual funds some of my retirement money is in.

[wordpix]

9. prices rise and fall - yes it helps if you have a 401K that stocks increase in price but

the market can just as easily fall if someone sneezes.

[SteveG]

13. My 403b

Has recovered to where it was at the end of 2007, with maybe a little more. Without the Great Recession, it would have been quite a bit larger, but maybe I'll be able to retire at 66 anyway in 4 years.

[leftynyc]

18. My 401k is 10% higher

than it was before the crash. And I'm smack in the middle of middle class.

[dmallind]

20. Me. Nowhere near the 1% by the way (nor 250k).

I make about 3% a month day trading a very modest stock portfolio. Rising markets aren't necessary for me to make money, but they accelerate the rate at which I do so.

[cstanleytech]

21. Well that makes 5 of you so far, its a start atleast.

[dmallind]

22. Out of how many respondees? What ratio is that?

ANYBODY who can come up with even a few hundred dollars can make money in stocks, even assuming they don't get a free trades new account bonus, which is almost always available.

The cheapest trading place I've found charges $2.50 per trade - buy and sell. So $5 a flip.

There are good, profitable companies everyday that blip down 3% or more based on some rumor, some unexpected news like a CEO resignation or a lost contract.

Do some research available free online. Invest say $500. Wait until it comes back up not the whole 3% it lost (or more - but this is a very conservative example) but just 2%. $10 profit -$5 fee is $5 - 1%. More than a savings account pays you for a whole year. I've been doing this for a couple years in both down and up markets (I use bigger investments, usually $5k and often sell at 1% up to keep churning, but same principle). Even in down markets it usually takes no more than a couple of weeks. Often same day in good markets. Often far more than 3% drop and every now and again I wait for more than 2% up (such as when Deere dropped 6% in a day after slightly underperforming expectations - I waited to grab 4%) but I NEVER try to wait for all the loss to recoup, NEVER buy an unprofitable company on speculation and NEVER buy anything at or very close to 52wk high. It's that simple.

Can it possibly fail? Of course. But with hundreds of such trades under my belt it never ever has for me - not once. I hold six stocks now. Three are up but not enough to sell, three are down - none held more than a few days. I'll even declare what the down ones are so you can check back to see how long it takes me to regain.

KLAC at 48.79
NFX at 33.45
NSC at 66.48

So unless people are unable to scrape together $500 (which is all too common as we all know but certainly not the majority of working people) or unable to follow basic principles that require no advanced financial acumen, the stock market can be profitable for all.

[former9thward]

25. Good strategy.

I do similar things and I have never had a losing year including 2008. You just have to watch stocks and not be married to them. Dump them when they have met your objectives and move on. Don't be greedy.

[slackmaster]

30. It put the value of my main retirement accounts back about where they were in the middle of 2007

If that's "helping," I guess I was helped.

[bhikkhu]

10. 54% of people in the US are invested in the stock market

Which I found surprising myself. Apparently its a mix of direct investments, 401k's, pension fund investments, etc. I don't own any stocks myself, but I know plenty of people who were panicked in 2008 when the market was tanking. Few people get more than one chance to save up for retirement, and a lot of that is in stock.

[olddad56]

11. are the stocks worth more, or is the money worth less.

seems like food and gas are worth more also.

[unc70]

17. Gas is about same as summer 2008

Gas prices dropped drastically fall 2008.

Gas prices have gone up recently, in part from speculation in the markets by Koch brothers. For various reasons, gas prices are predicted to ease slightly before November.

Food prices mostly reflect weather. Meat prices will drop in the short term, then be higher in six months as herd sizes are reduced.

[Ebadlun]

16. Rising house prices aren't 'wealth'

But they do make it harder for the next generation to house themselves.

[just1voice]

23. The markets are propped up by the Fed giving criminal banks no-interest loans

so the banks can charge exorbitant rates to consumers while the banks also commit numerous crimes such as real estate fraud, derivatives fraud, securities fraud, muni-bond auction fraud, worldwide libor rate-fixing and insider trading.

Th minimum wage is the same as it was in 1973, jobs have been outsourced by the millions, there is little to no job security in the U.S. and the FED thinks that buying worthless real estate bonds from criminals banks will stimulate spending and confidence?

LMFAO! 70% of Americans retire with $30,000 or less so just whom exactly profits from some propped up stock market gains and FED bond purchases? The banks do, the people don't.

[dmallind]

24. 54%

http://www.democraticunderground.com/?com=view_post&forum=1014&pid=239347

[askeptic]

26. You gotta cash it in -- if you are still riding the table, the next card could wipe it out

There are no fundamentals to support these asset prices and PE ratios. It is speculation, and like any game of chance, you gotta cash in your chips if you want to call it wealth. ...and home prices are nowhere near back -- millions still underwater except for a few areas

[slackmaster]

31. I'm not ready to cash in, but did a little re-balancing this morning and plan to do more of that

I took some accumulated dividend money that was just losing value to inflation, and used it to buy a specific health care industry company stock. It's in a self-directed IRA.

There are always opportunities out there.

[Earth_First]

27. How many 20-35 year olds are any further ahead now than they were before...

I am 33 with a self-funded 401(k) that is valued at about 10K with *NO* employer provided health insurance.

Yeah, we're doing just fine!

[trouble.smith]

28. Stocks are pricing more QE which will just mean more commodity inflation for most of us.

This rally doesn't mean shit to me but the price of groceries and gasoline does as does the value of my home. Regain wealth my ass.

[AlphaCentauri]

32. More people is moving to the House flipping business

A scam that attracts many to distort the reality of the housing market.