In just a few weeks, Wall Street has gone from an optimism that treated the US and Israeli attacks on Iran as a temporary impact to a more pessimistic view that the chaos in the Middle East could have long-term consequences.
Likewise, consumers — already sensitive to the cost of living — are facing yet another affordability issue as oil and gas prices have soared following the region’s supply constraints.
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As Larry Fink wrote in his annual letter to shareholders: “We are living in a period in which decade-defining events have become routine: wars with global repercussions, trillion-dollar companies, a fundamental reconfiguration of international trade, and the emergence of the most significant technology since at least the computer.”
Frankly, it’s been hard to keep up — and BlackRock’s CEO wrote that the drama and uncertainty suggested by day-to-day headlines may be obscuring longer-term trends.
Fink, whose wealth is estimated at $1.3 billion according to Forbes, said the vast majority of wealth has historically flowed to people who owned assets rather than those who made their money by working.
Since 1989, he noted, a dollar invested in the U.S. stock market has grown to be worth 15 times more than a dollar pegged to median income. This wealth effect will likely be similar in the age of AI, with those who have the resources to invest in the technology seeing their portfolios benefit more from asset appreciation.
Thus, the founder of BlackRock wrote: “This is where much of today’s economic anxiety comes from: a deeper sense that capitalism is working — but just not for enough people.”
For individuals looking to make a quick buck in the volatile stock market by trying to buy low and sell high, the results will not be the same as those who already hold accumulated wealth, Fink said: “Focusing on the short term doesn’t cut it.”
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Over the last two decades, highlighted the CEO of BlackRock, every dollar invested in the S&P 500 has grown more than eight times. But if an investor had missed the market’s 10 best days, they would have made less than half that return.
Thus, “staying invested mattered much more than getting the timing right,” and therefore “it is long-term investment that allows countries to build domestic industries, people to accumulate lasting wealth, and to show how their country’s growth can benefit them too.”
Fink’s view on the changing perception of capitalism is reinforced by research on the American Dream. In 2024, Pew Research surveyed nearly 9,000 people asking whether the American dream existed, and only a slim majority — 53% — said it was still achievable. 41% said the American dream was once possible, while 6% said it was never a reality.
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There was also a clear division of opinion: those with higher education, defined as having higher incomes, were significantly more optimistic about the possibility of achieving this goal.
One foot on the ladder
United States citizens are in a unique position to benefit from the world’s largest economy and its global market-leading domestic companies.
However, Fink wrote that many families don’t have enough cash on hand to even cover basic expenses — let alone invest consistently in volatile markets.
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A BlackRock survey of 1,000 voters in January found that a third of respondents don’t have $500 available for an emergency like a car repair, Fink said: “In fact, many are forced to withdraw money from the markets just to make ends meet. Last year, a record number of workers withdrew funds from their retirement plans to cover financial emergencies. The challenge is having enough saved to invest from the start.”
Creating products like Trump accounts will help families take the first step toward long-term investing, Fink said. However, an important instrument that could be used to foster wealth generation and potentially address income inequality is Social Security.
Fink reflected on the program’s current structure, which “emphasizes stability and predictability.” He added: “What it doesn’t do is allow people to grow their benefits as the economy grows as a whole. The question is whether the Social Security system could allow for both. Could a portion of the system be invested in a similar way to other long-term retirement plans — cautiously, diversifying, and over decades — while ensuring that the program remains a solid safety net?”
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This is by no means a proposal to privatize Social Security, Fink said, but some state and local government employees already contribute to public retirement schemes that are invested in diversified portfolios: “If long-term investing already helps millions of public servants build retirement security, a reasonable question arises: Why shouldn’t more Americans have access to this same type of long-term growth?”
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