“The door to the American Millionaire’s Club is not locked.” — J. Paul Getty, America’s first billionaire.
I gave my Presidential Fellow address last night at Chapman University to an enthusiastic crowd on the vital subject, “Main Street vs. Wall Street: The Stock Market as the Best Example of Democratic Capitalism.”
I begin with a short history of how Wall Street has gradually offered better opportunities for the middle class and how low-income earners can participate in the stock market and play the rich man’s game. Since the 1920s, small investors have been able to buy stocks through mutual funds. Then in the 1950s, Merrill Lynch started promoting stocks as a way for the small investor to get rich. In the 1970s, the financial revolution began with Charles Schwab offering the first discount brokerage services.
Today, the commissions on stocks and the fees for mutual funds have dropped substantially and are close to zero. This means that practically anyone can invest with the Rockefellers and the Romneys. My wife and I wrote a book on the subject in the early 1980s, “High Finance on a Low Budget.”
The Roth IRA: Not for the Rich!
Many critics of Wall Street complain that all the breaks and the bailouts went to the fat cats on Wall Street. Not so. The Roth IRA is a great vehicle for the middle class and low-income crowd to invest in the stock market. It allows investments of up to $5,000 a year to earn capital gains and dividends tax-free. Investors then can withdraw their money at retirement without paying any taxes.
The Roth IRA is not available to anyone earning more than $100,000 a year. So it’s a break for the small investor only.
I suggested to the audience that the Occupy Wall Street crowd could buy stocks in all the bailed-out banks, hedge funds and private equity firms to profit from the bailout. I call it the “Don’t Get Mad, Get Even” strategy. I suggested investing in Bank of America (BAC), Goldman Sachs (GS) and even Fannie Mae (OTCBB: FNMA), which has skyrocketed nearly 1,000% in the past year!
In sum, the small investor doesn’t have to sit by idly and see only the so-called 1% highest earners profiting from Wall Street.
Average American is Not Investing in the Stock Market
But sadly, the average American is not participating in the rally on Wall Street. According to Gallup, only 52% of Americans are stock market investors, the lowest level in 20 years.