Op Ed : For 90% Of The World, There Is No Logic Or Means

My professor friend solved that confounded Primary 5 math logic problem in less than 2 minutes, to none of my amazement of course, because we would expect All Teachers and Principals and Ministers in Singapore to be able to solve that problem before they got their jobs, would we not ?

pri 5 math

As for low-lifes like me, I did get the answer right too !!! But my workings were wrong and as it turned out, I arrived at the right answer ILLOGICALLY. So there is 1 method to logic, eh ? No marks for creativity and imagination ?

Yes, but who can fix a clogged toilet that the boy has been stuffing plastic and paper into ? And who will FIX THE BOY UP after she fixes the toilet ?

No boast or shame, but I wormed my way through the MBA without studying much, by just brandishing my favourite theory of all time – CHAOS THEORY. You see, if you Chaos Theory everything and every management subject, there is little else to study because Chaos wins.

And will Logic tell us where the Hang Seng is going today ? ‘Fraid not.

There are limits to logic and limits to the benefits of logic because if we wanted logic to work, everyone would have to be logical. And logic does not perform under pressure and neither does it make dreams come true.

Back to the US 70 trillion dollar stock markets of today, more than double what it was 6 years ago.

global mkt cap

I sat back and tried to work it out LOGICALLY.

Are we richer ? Yes, more money than yesterday. Not richer than those who have more shares than us. But richer than those who have no shares at all.

Who owns stocks ?

I tried to find out and the number is quite hard to pin down and I could only find 1 source of some comprehensive work done in the past decade out of England back in 2009.

global share ownershiphttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364765

Even the World Bank balks at such an idea for I could not find anything from their otherwise comprehensive studies over the years.

This particular study concluded that there were just over 300 million active stock investors back then and another 200 million inactively vested in the markets via their pension funds, for the 94% of the global population that live in countries with equity markets.

We know that the number had grown with Chinese opening an average of 205,000 share trading accounts each week for the past 5 years which includes the 1.2-1.68 million new accounts each week in the past month (assuming the accounts will not be closed ……).

Source : Reuters

Source : Reuters

 

The result is that 6.6% of the world population owns shares in the stock exchanges (world population in 2009 was 6.1 bio), developed countries contributed most of that number with 18.8% of developed markets owning shares while emerging markets had only 2.5-5.3% of their populations involved.

And it is better in the developed world because ownership is enhanced through privatisations of state assets and the population gets a share of the pie.

Contrast that with the recent IPOs we are seeing out of Alibaba and gang which serve to enrich a few.

Can we say that out of the 6.6% who own stocks, perhaps 0.1% got exponentially richer over the rest ? And the rest got exponentially richer than those 90 odd percent who do not own any shares ?

Time to bring in the cartoons that are flooding media streams on the hot topic of the growing inequality in the world today without citing Picketty.

TOOTH FAIRY

Sydney Sun Herald 11 April 2015

 

Now, what will logically happen in time ? When people realise that the top 400 billionaires in the world increased their net worth by $133 bio in the first quarter ? Only $333 mio on average they each earned (or not really earned because it is a valuation game) ?

The markets better keep going higher to snare more new investors so they will start feeling richer as China is doing to take their minds off the fact that there is a widening social gap as billionaires dominate all the way from the top, with 59 billionaires in their National People’s Congress. http://www.cbsnews.com/news/billionaires-dominate-gathering-of-china-parliament/

That is a better option than if Putting-A-Stone-Through-The-Ferrari becomes the favourite national past  time.

For equity markets are still seen as the quick get rich formula for most of the 90% odd percent of the world who are aware of its existence and without the stock market, hope and dreams appear more remote than ever, even for those who possess the logic but lack the means.

Owning stocks is more about having the means than having any logic.

You see, if majority of the 300 mio stock investors cannot solve that logic problem above, what are the chances that the rest of the over 6 bio people in the world have besides stoning cars and burning houses ?

That is the part that escapes me most – Where is the Logic In That ? And we shall  continue to rally away …..