The Next Stock Market Wealth Transfer has Begun

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Episode Transcript

Speaker 1 (00:00):
We hear about inequality and wealth concentration quite a bit,
but one thing that rarely happens is looking at the
actual numbers. How is this wealth held, Why is the
inequality there in the first place, and most importantly, can
anything be done about it? By looking at this chart
from the Federal Reserve, we can see the difference in

(00:20):
the wealth held by the bottom half of Americans versus
the top point one percent. A blue line at the
bottom represents the bottom fifty percent, so collectively hold just
under four trillion dollars of wealth versus just the top
point one percent of wealthholders collectively own about twenty trillion

(00:43):
dollars worth of wealth. Now, obviously this is a massive difference,
but we have to dig a little bit deeper than
just seeing inequality here to see what is actually going on.
Drilling down a little bit deeper, we can see the
stock market plays a huge role in this. There's this
idea out there that the stock market is simply a
wealth transfer mechanism. It's there only to transfer wealth from

(01:06):
the working class to the top one or the top
ten percent. And at first glance, when we take a
look at this chart, which shows who actually owns all
of the stocks. We see that the top ten percent
hold about ninety two percent of corporate equities and mutual
fund shares. So at first glance that assessment would seem true.
But when you pull back the layers a little bit,

(01:27):
you have to ask yourself a question, Well, why do
the top one percent and the top ten percent have
so much ownership in the stock market. Maybe it's not
stocks themselves that are a bad investment and just there
to transfer wealth. Maybe there's something else going on behind
the scenes. And there are actually two other things going
on behind the scenes here that make the stock market

(01:49):
a wealth transfer mechanism from the poor in the middle
class to the rich, and that is number one suckers
and number two central bankers. Looking at this chart, I
want you to notice this dip down in concentration of
ownership of the stock market that happened during the Great
Financial Crisis, and then the rebound that happened afterwards. You'll

(02:09):
notice that it peaked out in two thousand and seven,
where the top ten percent owned about eighty five percent
of the entire stock market. That time period was somewhere
around right here on the S and P. Five hundred.
You'll notice there was some volatility after that, but the
stock market actually peaked a little bit higher a little
bit later. But by Q three and Q four of

(02:32):
two thousand and seven, the ownership concentration in the stock
market among the top ten percent had already started to dip.
So while this sell off and rebound and making new
highs was happening, the top ten percent were actually selling.
You're going to start to see here what I mean
by suckers. During this time period, the wealthiest had already

(02:53):
started to get out of stocks. You can see up
until quarter one of two thousand and nine, the constant
among the top most wealthy continued to decline and then
bottomed out in quarter one of two thousand and nine.
This right here was quarter one of two thousand and nine,
So by the bottom of the stock market, the wealthiest
had already gotten out. So during this entire time, the

(03:16):
wealthiest were getting out again. Because the chart that we're
looking at is of the top ten percent, what is
their total percentage ownership of all of the stocks. And
while the stock market was crashing, that concentration was declining,
meaning that overall, on a net basis, the rich were
getting out and the small investors were getting in. Yeah,
it did not take very long at all for that

(03:37):
trend to completely reverse, because by quarter three of twenty ten,
the top ten percent had already accumulated back up to
the same eighty five percent ownership of the entire stock
market that they had before, and then even at a
short term peak by one year later in quarter one
of twenty eleven at eighty six percent. You can see
quarter one of twenty eleven was right around here where

(03:59):
the stock market had not yet come up to its
old all time highs, and quarter three of twenty ten,
when the rich got back up to eighty five percent
of the entire stock market, was right around here again
much lower, much much lower than the old all time highs.
This means that big money the richest were selling when
the poorest were buying while the stock market crashed, and

(04:23):
once the crash was about done, the rich started buying
again right as the poor were selling. This left the
top ten percent back in ownership of the exact same
amount of the stock market that they owned before, yet
it was at much lower prices than what they owned
it at before. This is the wealth transfer mechanism at work.
Small money retail investors buying at the top and then

(04:46):
getting flushed out at the bottom. For every buyer, there's
a seller, and for every seller, there's a buyer. In general,
small investors retail investors tend to buy at the tops
when the big money is selling, and they tend to
sell at the bottoms when the big money is buying.
This is how big money got back up to its
eighty five percent ownership of the entire stock market by
this time, when the stock market was much lower price

(05:09):
than it was before. Around here, and obviously after that,
their total stake in the entire stock market continued to
grow and grow and then skyrocketed after the money printing started,
and is now sitting at a record ninety two percent.
So what you'll notice is the exact same thing is
beginning to happen right now that happened during the Great
Financial Crisis. Big money, the richest, the top one to

(05:29):
ten percent, is starting to get out of the stock
market right as retail is starting to get in. First,
take a look at insiders selling their shares. When this
chart has a reading of under twelve to one, it
is bullish. Under twelve to one means insiders are generally
buying they're not generally selling. That is bullish for the

(05:51):
stock market. The people who know the absolute most about
their companies and are the richest are not net sellers.
A ratio of over twenty to one is bearish, meaning
insiders are selling. The people who have the most money,
who have the most connections, and who know the most
about their companies are selling. Well, if twenty to one

(06:12):
is bearish, what do you think the current level of
one forty five to one is? Is very difficult to
overstate the bearish sentiment that people should be feeling right now,
understanding how significantly insiders are selling again, the top one
to ten percent, the richest, the people who know the
most about their companies are selling at crazy rates. For

(06:36):
every seller, there's a buyer. And who is the sucker?
I mean the buyer this time? Well, as we can see,
Bank of America recently just did a poll and show
that US optimism about the stock market is at its
highest level since twenty twenty one, and that investors are
most overweight in US stocks since December of twenty twenty one.
Did Americans just suddenly forget what happened in December of

(06:57):
twenty twenty one? December of twenty twenty one was literally
the top of the market before it entered a year
long bear market. Big money has spent the last couple
of months shooting stocks up higher. It has led to
fear of missing out, and retail and small investors are
piling in at a record pace. They're the ones that
are gonna be holding the bag when this thing starts

(07:17):
to fall. Now, if you know anything about traditional investing advice,
you're probably sitting there screaming, Well, this is why people
say to never sell. This is the common sense investing.
Because if all you do is buy dollar cost average
and hold forever, then you're not gonna be the one
buying at the tops and selling at the bottoms. You're
gonna be able to participate along with the rich and

(07:38):
just ride that thing up higher. And there is certainly
some wisdom in that, but that strategy is incomplete. Number one,
because the times when the stock market falls the most
are likely the times when you'll need the money the most.
You may not have a choice. People don't sell when
and what they want to. They sell when and what
they can, and many times. The reasons why the stock
market crashes so severely is because people are forced to sell.

(08:01):
They have to. Number two, you can't actually buy and
hold forever because at some point you're actually going to
need to use the money. That's the whole point of
investing in the first place, is to maximize your wealth
over the long term so that you can use it.
Otherwise it's a worthless number on a piece of paper,
and if it crashes and you don't have a way
to protect yourself when it crashes, you're out of luck,

(08:22):
just like everybody else who sold to the top one percent. Now,
in case you're sitting there crying about corporate greed and
the elites and thinking we need somebody to come in
and strike down the top and increase socialism and increase
equality and tax the rich, understand that the problem runs
much deeper than that. What I've just shown you with
the stock market and wealth concentration is a symptom, not

(08:43):
a problem. And it all started back in nineteen seventy
one when the United States left the gold standard and
the US government was free to print as much money
as they desire. Prior to nineteen seventy one, both compensation
on average and productivity grew the same pace. So once
the money printer was unleashed, productivity continued to climb while

(09:05):
compensation for the average worker flatlined. Similarly, we can see
that real GDP per capita per person threw at the
same rate as the real median weekly earnings of full
time earners up until again nineteen seventy, when they detached
and the real median weekly earnings of full time workers
flat lined while the real GDP per capita continued to

(09:27):
climb at the same pace. Similarly, we can see that
real family income grew at the same pace for different
wealth core tiles until again nineteen seventy, when the top
percentage of wealthholders continued to increase their wealth and the
bottom percentages of wealthholders flatlined. This is shown even more
clearly by looking at the top one percent of income

(09:49):
earners versus the bottom ninety percent of income earners. In
nineteen seventy, the income of the bottom ninety percent of
earners flat lined, and shortly after the income of the
top one percent of earners started to skyrocket. These are
trends that were not in place until the money printer
was unleashed. And the money printer becomes unleashed, US government

(10:10):
or any government in general, is allowed to spend as
much money as they want by financing their debt with
newly printed money. This increases the money supply. It causes
prices to go up, which makes debt easier to repay,
which makes the biggest debt holders the biggest beneficiaries of
all the newly printed money. And the biggest debt holders
are always going to be the government, government contractors, and

(10:33):
large corporations, which means that central banks, central planners, and
the money printer are the direct cause of wealth inequality.
They are not the ones fighting it. But there is
some good news. Number One, you have the choice to
not be a sucker. Don't fomo in at the top
when everybody is buying, and don't panic sell at the
bottom when everybody else is panic selling. When everybody else

(10:54):
is jumping in for fear of missing out or thinking
they're going to get rich, there's euphoria. That's when you hedge.
I don't sell because you don't know the timing. Just
hedge just in case when everybody is panic selling and
getting out because they think it's the end of the world. Bye. Now.
I make these videos here on YouTube because I truly
believe that the world will be a much better place
if as many of you as possible are as rich

(11:15):
as possible. Money can't solve every problem, but it can
solve every money problem, and most problems are money problems
just in disguise. So I make these videos to teach
you how money works so that you can make more,
and keep more and give more. But some things can't
be learned in a twelve minute YouTube video, and that's
why I created Heresy Financial University so that those of
you who are ready to make the investment can learn

(11:38):
the strategies and the tactics that the professionals use to
grow and protect their portfolios. Now I've been doing this
a while now, I've lost a lot of money doing
things the wrong way, but I've made a lot more
money doing things the right way. I've learned from the best.
I've packaged it all up for you so that you
can learn and take the tools necessary to grow and
protect your wealth. So, if you don't want to be

(11:59):
a sucker, but you actually want to profit from these
crazy economic times and beat the central planners at their
own game, join Harsea Financial University linked to the description below,
And for those of you who hung on to the
very end, here I've got a special deal for you
for one day only, just today, Harcie Financial University is
forty percent off. Use code YouTube forty when you check
out to get the deal. As always, thanks so much

(12:20):
watching Have a great day.