Whether you are a Wall Street insider or are on the outside looking in, there’s no denying that Wall Street has had a profound impact on your life in some quantifiable way. It’s without a doubt one of the most dynamic and polarizing financial institutions to have ever existed.
After countless hours scouring the internet, I decided to compile the 10 most shocking facts about Wall Street below.
46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die.
One of the most prevalent worries among Americans is not having enough money to live comfortably in retirement. Unfortunately, it seems this worry may be well-founded.
The 2008 US Financial Bailout cost more than the Marshall Plan, Louisiana Purchase, Race to the Moon, S&L bailout, Korean War, New Deal, Iraq War, Vietnam War, and NASA’s lifetime budget, combined.
For perspective, here is a breakdown of the inflation-adjusted costs:
• Marshall Plan: Cost: $12.7 billion, Inflation-Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation-Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation-Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation-Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation-Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation-Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation-Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation-Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation-Adjusted Cost: $851.2 billion
• TOTAL: $3.92 trillion
Financial Bailout: $4.62 trillion
Source: Boing Boing
If you invested $1,000 with Warren Buffett in 1956, you would have over $300 million today.
Einstein famously called compounding the ‘eighth wonder of the world,’ and for good reason. $1,000 invested with Warren Buffet over 58 years, with a 22% annual growth rate, would yield you north of $300 million dollars.
During the Federal Open Market Committee meeting on June 27-28, 2007, the word ‘recession’ was used 3 times, while the word ‘strong’ was used 61 times.
Only six months after the FOMC meeting, the economy entered a recession.
Source: The Federal Reserve
Investors can be shockingly oblivious to overall stock market performance.
1,000 investors were asked whether the S&P 500 was up or down during 2009. 66 percent thought it was down in 2009. In reality, it was up 26.5% in 2009.
From 2002 to 2012, hedge fund managers have been outperformed by not only the stock market, but inflation as well.
With the high fees charged by hedge funds, there is an expectation of above-average expertise and returns. There are, of course, outliers that have continually beaten the markets, but it appears that these market wizards are few and far between in the hedge fund industry.
Source: The Economist
Wall Street accounts for a meaningful portion of total New York City earnings.
The financial services sector, which includes finance, insurance, and real estate firms, accounts for approximately 35 percent of total New York City earnings.
Source: New York Federal Reserve
The average salary of a Wall Street employee dwarfs that of an average American.
The average salary of persons with doctorates in the United States is $81,400, with the median income of a U.S household at $50,054 per annum. While you might suspect the average salary of someone working on Wall Street to be higher, the discrepancy is frankly shocking. Their average salary is a mind-blowing $363,000, including bonuses.
The number of investors who check their accounts drops by 8.7% following a market decline compared to a market increase.
This statistic is likely a byproduct of the behavioral finance phenomenon known as the ‘ostrich effect,’ whereby individuals avoid risky financial situations by pretending they do not exist.