Tête-à-Tête-Tête

I have no basic knowledge of economic issues but aren’t investors always workers?

And if there are two economic America’s, how do you think it splits up?

50-50? 80-20?

Investors can be workers - but they can also be heirs or heiresses. They can also be workers in the sense of salespersons whose work is to schmooze with other executives and host golf tournaments for them. Or Lawyers. Doctors. Investment analysts. Fact is the disposable wealth needed to be an investor usually resides among the better-to-do, whether they work for a living, schmooze for a living, chase ambulances for a living, or (wonder of wonders) actually help people (who have good insurance) for a living… and those who don’t do anything but take returns on investment for a living.

If there are two Americas, I would suggest that the dividing line comes near the point where a person has enough disposable income that they can make a useful profit on their investments over a relatively short-term (not just in retirement, that is). The people in America #1 can work (or whatever) and build on their gains with little fear of economic catastrophe. The people in America #2 are Sisyphians - pushing the boulder up the hill every day, knowing their fate is to push it up again the next day - unless catastrophe does strike and they are faced with bankrupcy or worse.

On a personal note, my family hovers somewhere between the two. We are among those rare skilled workers who make enough that, with discipline, we could bootstrap ourselves into America#1. So far, we haven’t done so.

I like smijer’s breakdown. I was thinking along the same lines, considering investors those for whom a significant portion of earnings are from investments, and who live above a middle class level. I think this is probably a small proportion of the public, maybe 20%?

I’m not advocating anything like class warfare, but when a serious newspaper writes about investors “cheering” because of an economic trend that’s based on people not being able to find jobs, I think that shows there is a divide. When I hear about someone I know losing a job, that’s not reason for celebration. If my investments are such that I profit when this happens, I think I should change my investments.

It’s simpy the market at work.
Every time, over the past 3 years or so since the economy has started to heat up, that the jobs & growth figures came out there was speculation that inflation was just around the corner.

Thus the slow rise in interest rates.

It’s simply a fact of life that when certain segments come in with good or bad numbers, a portion of the market will react positively. There’s nothing nefarious about it. Just as when there’s an accident on the interstate & you (or I) are able to merge on 1/2 ahead of the accident during rush hour and enjoy the near-empty freeway, one needn’t assume that there is joy or celebration over someone’s misery. That only occurs when someone well off meets an unhappy situation (admit it, everyone likes it when the wealthy “get their comeuppance” in some fasion. Leona Helmsley, Ken Lay and now Mel Gibson).

If someone owns stock in a company that makes microchips for, say, military equipment, that doesn’t mean that they celebrate when that equipment kills people - they’re only happy when their stock rises. They’re only cheering the market, not the minutia.

7% growth in the GDP would cause someone to think “wow, the economy is better than ever!” but it would cause the market to think “wow, we’re about to have some heavy-duty inlfation”. It’s simply the market at work.

No biggie.

No biggie.

Maybe that’s what makes me a bleeding-heart liberal. I think it is a biggie and want to deal with it. I don’t think there’s someone to blame, of course, but rather that we should pay attention to the system and see what we can do to alleviate problems. You give some good examples that I’ve considered before.

A defense company that makes military weapons? I quit working for such a company fifteen years ago, and this was one of my reasons.

A clear road ahead due to an accident? Accidents happen to everyone, and while no one is glad an accident has happened, I think we’d be sorrier if accidents mainly happened to a set of people who are least able to deal with the consequences.

In other words, I think I understand how the market works, and that there are winners and losers. I wish that more winners paid attention to the losers, the minutiae.

RSA,
People pay attention to the losers. We’re a compassionate country. We spend billions on education & training to ensure that people get a leg up and we spend billions on helping people who are down on their luck (as I have been). But, it’s a simple fact of life that, for example, when a plane crashes that the stock for that airline will suddenly drop and then once an investigation finds (as it generally does) that it was simply an accident, the stock price goes right back up to where it was before. The people who bought short in the interim aren’t any less compassionate than anyone else….they’re simply smart and hedging their bets that the airline won’t be negligent.

I wish that more winners paid attention to the losers, the minutiae.

A shot at “winners”….in what context? Should stockholders give away their gains to “the losers”?

Good questions, RW. I have to confess that I have no good ideas.