Stock Market Made 20 Billionaires $81 Billion Richer Last Year


High-frequency trading distorts markets, enriching insiders and hurting everyone else.

Twenty of the country’s wealthiest CEOs made a combined $80.9 billion on last year’s surging stock market, the Wall Street Journal and FactSet report.

Renowned investor Warren Buffett led the pack with a $12.7 billion annual gain in his portfolio’s value, with Amazon and Facebook founders Jeff Bezos and Mark Zuckerburg close behind at $12 billion and $11.9 billion, respectively. The volatility of the stock market means those on-paper gains are vulnerable to reversals of fortune unless investors sell, and the Journal notes that Buffett has lost $2.8 billion in the first month of 2014 amid a stock market downturn. While Buffett didn’t sell any of his holdings last year, many others on the list locked in some of their portfolio gains. Microsoft chief Bill Gates sold $2.5 billion worth of stock last year. Google co-founders Larry Page and Sergey Brin each sold a little under a billion dollars’ worth of stock. All three retained massive holdings in their companies after the sales.

If the market gains that made these billionaires even wealthier translated into similar gains for the American public at large, perhaps none of this would be newsworthy. But they do not. Stock market gains are great the already wealthy who hold substantial portions of their net worth in the markets, but the vast majority of the country either doesn’t have any such wealth or has it concentrated in the value of a home or other durable investment property. As a result, stock market gains make the wealth gap between rich and middle-class families even wider when they’re not accompanied by a broader economic recovery. Last year was a strong year for the stock market, but it also continued an overall market rally that’s been underway for a few years that has allowed people who were wealthy prior to the crisis to weather the Great Recession far more comfortably than working people.

It is little wonder, then, that the American middle class is evaporating. It’s not just economists saying that: Fewer Americans than ever believe they are members of the middle class, and businesses that rely on middle-class customers are struggling as product lines targeted to the rich are growing rapidly.

A wealth recovery for the non-wealthy might still be a long way off. The housing market has shown signs of stabilizing in recent years, but with millions of foreclosures over that period and millions more homeowners still underwater on their mortgages, the future of homeownership as a source of wealth is murky. Wall Street sees an opportunity in the breakdown of the traditional linkage between homeownership and middle-class prosperity and has bought up hundreds of thousands of homes in hopes of becoming the country’s landlord and extracting wealth from the new bumper crop of working-class renters. Those same workers have seen their wages fall since the crisis and have suffered a “lost decade” in earnings despite raising their overall productivity by about 25 percent since the turn of the century.