One Alarming Statistic Proves Inflation Is Destroying Your Ability to Invest in the Stock Market

By January 2, 2020Bitcoin Business
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American workers, 2019
Inflation and record debt have made it harder than ever before to own a piece of the U.S. stock market. | Image: Spencer Platt/Getty Images/AFP
  • The average American has to work harder than ever to own a share in the S&P 500 Index.
  • Americans are straddled with debt, making it a lot harder for younger people to invest in their future.
  • This is just another indication that inflation poses a real threat to wealth accumulation in the next decade.

Here’s an uncommon statistic. According to market commentator Holger Zschaepitz, it now takes the average U.S. worker over 125 hours of labor to buy just a single share of the S&P 500.

That may sound reasonable to the uninitiated but a closer look at the charts reveals otherwise:

Average US workers takes 126 hours to buy 1 share of S&P 500.
The average US laborer never had to work harder to buy the S&P 500 | Source:

Notice above that the period between 1950 and 1990 was marked by stable values. As Zschaepitz points out, any mom and pop back then could invest in their future for as little as a Jackson.

The 2008/09 financial crisis restored the balance somewhat but now as we enter 2020 the ratio has climbed more than six times higher than the affordable lows of the ’80s.

More Important Things to Worry About Than the S&P 500

So what’s going on here? Some responders argue that this is just the natural state of wealth creation. But that’s a bit of a stretch when you consider that the average U.S. worker has more important things to worry about.

Deutsche Bank notes that half of all Americans are diving into debt just to maintain their living standards:

So unless people are borrowing money for stocks, the average Joe just isn’t buying equities. A recent survey from Gallup confirms this. The percentage of Americans who own stock is down roughly 8 percentage points decade over decade.

CCN recently reported that the long-term bull market in stocks has made Americans richer than ever. At least on paper and particularly for boomers. But the U.S. economy is also entering its 127th month of expansion – the longest in recorded history.

So you have to ask yourself one question: which savvy young investor actually wants to pay a sixfold premium for the S&P 500 this late in the cycle?

Inflation, the Silent Killer

If Zschaepitz’s chart isn’t evidence enough of worrying U.S. inflation, I don’t know what is. The Fed continues to deny that it exists but anyone who doesn’t live in a bureaucrat bubble will tell you otherwise:

It’s like there are 2 economies. The one reported and the one that actually exists on the street… No amount of BS can mask the street reality. People are struggling.

It’s no surprise that gold is on a tear. And equally so why bitcoin was just warming up in the last decade. I’m no fortune teller but there surely isn’t a more important time to be well-diversified.

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