Ultra High Net Worth Investors
If you are what the investment industry calls an "Ultra High Net Worth" investor, it means you have $30 million or more invested in the capital markets. Congratulations. You got 32.4% of the $5 trillion that was created during the Christmas Rally.
There are 108,740 Ultra High Net Worth investors in the world. They make up the top 1% of the top 1% of wealth. (0.1% if you're keeping score.) They own 32.4% of all invested wealth, which means that these folks pocketed $1.62 trillion of the $5 trillion Christmas bonanza.
High Net Worth Investors
The next tier of wealth is called "High Net Worth" investors. These folks have accounts worth between $1 and $30 million. There are a lot more of these folks than the Ultras. More than 22 million in fact. They pocketed 60.7% of the stock market Christmas gift, which comes to just over $3 trillion.
Mass Affluent Investors
And that leaves us with all of the investors who haven't yet made the cut for inclusion in the wealth sweepstakes. The investment industry calls these folks the "Mass Affluent." Kind of catchy, don't you think? They live in McMansions and drive Audis or Beemers, but they haven't quite made it to the big leagues.
Even though this cohort is by far the biggest in number at 140 million members, they only captured 7% of the Christmas Rally, or $350 billion. On a per-capita basis that comes to only $2,500 for each investor in this tier.
I could drill down even deeper, into the categories of wealth, but it would probably bore you. So let me get to the point of this article
Does the stock market drive the economy?
There is a meme going around in the financial media which claims that retail sales are driven by the movement of the stock market. The latest report on retail sales was unexpectedly weak, and pundits jumped to the conclusion that it was down to the stock market correction we had last fall. I disagree.
Our economy is driven by consumer spending, but do you really think that a drop in the stock market will prompt consumers to drastically cut back on spending? If the drop is serious, like 2008, then yes. People freak out when that kind of decline happens. It's a survival reaction.
But a swing in the market of 10% or 15% doesn't really move the needle for retail sales, at least in my experience. The stock market certainly has an influence on consumer behavior, but it doesn't drive retail sales, and it doesn't drive the economy either.
The next time you read an article that claims the stock market went up for this reason, or down for this other reason, or caused consumers to stop buying groceries and clothing, stop and think about how the behavior of the market has affected your own spending habits.
You can find all of the statistics used in this article by downloading the latest report on global wealth from Wealth-X here.