From 1983 to 2013, the S&P500 index minus expenses grew 1,102%. During the same thirty-year period, the average mutual fund investor earned 239% or just 22% of the growth! (Bogle, J. C. Don’t Count on It! John Wiley and Sons, Inc. 2011)
The estimated 56.2 million households or 44.5% of all US households that own mutual funds made just a fraction of what the market delivered!
Where did the trillions of dollars difference go? The trillions that the mutual fund-owning families could have or rather should have had? Wall Street/Bay Street tells us that it went to cover expenses. True enough if we count the investment banks’ employees’ income, only some of which is legitimate and disclosed. It comes to $US367,564 annually. Average! (Goldman Sachs most recent financial disclosures) Individuals at the top of the investment banks feeding chain earn over a million dollars a week! A week! That is not a misprint.
And what do they do to “earn” their incomes? The original investment banker role of bringing investors together with entrepreneurs needing capital, accounts for a small fraction of what investment bankers do today. These days they mainly shuffle paper and play tax games.
A general surgeon friend of mine goes to some god-forsaken African country to do surgery and save lives. He pays his way there and back and pays for room and board when he is there. He has gone to some god-forsaken South American country to do the same, ten times.
The investment banker, health care worker motivation — what could be more different!!
The self-serving behavior of Wall Street/Bay Street is well known. Unreliable though it is, the number one predictor of future behavior is past behavior. Wall Street/Bay Street will continue to benefit from the work of others, people like my friend will continue to benefit others and Monday Morning Millionaire Program members will continue to earn their fair share of the growth of the US economy. How do they do that? They do it by: