Tag Archives: economics

4 Reasons Why Not To Go Long The S&P

global investingMy Comments: Some of my responsibility as an investment advisor is to provide warning if I think there are pending changes in market direction. But since I have no idea what I may eat for lunch today, telling folks about the next crash will happen is pure speculation. But…

I compensate for this inability by having as much of their money as possible in accounts that have historically moved away from the markets and into cash and short positions when the signals are strong that a downturn is happening.

I’ve included only one chart from the article here. To the extent you want to see the rest, this link should take you to my source article: http://seekingalpha.com/article/2466765-4-reasons-why-not-to-go-long-the-s-and-p

Jack Foley, Sep. 3, 2014 2:43

Summary
• Many large cap stocks are not making new highs like the SPY. This is a worrying sign.
• Interest rates have to rise in the future which will put downward pressure on the stock market. Veteran trader Steve Jakobsen believes we could drop 30% from here.
• Oil seems to have bottomed and oil has the potential to make the whole commodity sector rally along with it.

The S&P 500 (NYSEARCA:SPY) has broken through the physiological number of 2000, and commentators and speculators alike are predicting higher highs from here. I am ultra short on this market but it is becoming increasingly hard to predict when this market will roll over in earnest. Investors who are short the market are really hurting right now, and it takes a brave investor to stay short in this environment. Nevertheless, the risk is all to the downside so an investor must stay extremely nimble if profits are to be made. Let’s explain why.

First of all, even though the market is making new highs, there are many large cap stocks that are not participating in this move. Look at the General Electric Company (NYSE:GE) to see how far it is below its all-time highs.
14-9-16 General ElectricAlso because we have extremely low interest rates, corporate earnings are inflated. Bonds and stocks have rallied hard for the last few years as these markets have been the benefactors of the US’s low interest rate environment.

Nevertheless, interest rates one day will have to rise. When they do, investors will start shifting their money back into fixed term savings accounts. Bonds trade inversely to interest rates so when rates rise, bonds will come under pressure. The problem with low interest rate environments is that they can create asset bubbles. I believe we have one forming in stocks, in bonds and in certain real estate markets globally. In London, for example, property prices may rise by 30% this year which is unprecedented in a struggling global economy we have nowadays.

Veteran trader Steve Jakobsen believes that we could see a 30% drop in the S&P 500 from these levels. Jakobsen believes that equities is the only asset class that hasn’t been really affected from this ongoing global financial crisis.

Therefore, he believes one day the S&P 500 will revert to the mean which could be as much as 30% lower than where we are now.

Finally, I like the movement oil is making at the moment and I think we have finally found a bottom. Tthe spot price of light crude oil has gone from $108 in June to a rising $95 at the moment. The bottom seems to be in and if oil can rally from here, I believe it will put pressure on the stock market as funds will start to leak into the commodity markets. Oil has the potential to take the whole commodity complex with it when it’s in bull mode, so depressed agricultural commodities such as Corn and Sugar should also benefit. As you can see from the chart below, commodities have struggled as a whole in the last few years as equities have rallied hard.

Yes, equities and oil can rally together and have done so up to January 2013 since 2008 (practically everything rallied once the Fed ran their printing presses) but since January 2013 oil has not participated in the move. Once the Federal Reserve eventually ends all stimulus programs (either voluntarily or by demand), I have no doubt capital will start leaking into the commodity markets and oil. Also if geopolitical tensions in Iraq and the Ukraine escalate, oil will spike and the world stock markets will decline sharply.

To sum up, there are enough warning signals to warrant not being long here in the US stock market. If you still think the rally is not finished, I would advise scaling down your position size.

Central Banks Pump Up the Volume

USA EconomyMy Comments: The US Federal Reserve took a very different approach to helping the economy recover from the financial crisis that began in the fall of 2008. Pushed by Mr. Bernancke, the Fed provided what came to be called QE, which stands for quantitative easing. It kept interest rates low and effectively flooded the economy with cash with the idea it would result in faster recover. This is not to say it was hugely successful.

The European approach was almost the opposite. They avoided the Keynesian approach and instead moved to promote austerity, deprive the economies of liquidity, and force accomodation by governments and business enterprises to take a hit and adjust or disappear. It now appears that austerity was the wrong path. This should have been obvious from the experience of Japan some two decades ago when they took this approach and ended up with what is known as the lost decade. There was virtually no growth for ten years, and while savings accounts grew dramatically, no one spent anything which stymied everything.

Some weeks ago I acknowledged that my personal spending habits, following our crash in 2008, are now part of our problem. If I make money and don’t spend it, my sense of security is increased, as I have money in the bank. But for every dollar that I don’t spend above what is absolutely necessary, about $7 is removed from the local economy. That’s because my $1 represents revenue to somebody else, which in turn means that person can spend it on a new car, or whatever. It’s the multiplyer effect and contributes to the velocity of money.

Now, Scott Minerd says the European central banks are likely to turn the corner and become more accomodating. That means good things for those of you who have money invested in the global economy and growth will be the result.

September 03, 2014 / Commentary by Scott Minerd, Chairman of Investments and Global Chief Investment Officer, Guggenheim Funds

Aggressive central bank accommodation from Europe to Japan and a dovish Federal Reserve bode well for equities and bond prices.

The Federal Reserve’s annual getaway in Jackson Hole is not usually considered a gathering of rock stars, but that’s exactly how the late August event unfolded. The hawks loosened up the crowd with their dark, foreboding lyrics. After that, the doves sweetened the mood, singing a far more melodic and happy tune. Then the event’s two biggest stars—Fed Chair Janet Yellen and European Central Bank President Mario Draghi—hit the stage amid the twin pyrotechnics of easy money and a vision of the future where every worker has a job, and the crowd went wild.

The biggest news was Dr. Draghi’s comments that the ECB may soon have no option but to join the United States and Japan in undertaking more aggressive accommodation through a quantitative easing program, taking up the slack as the Fed ends its asset purchases. “On the demand side, monetary policy can and should play a central role, which currently means an accommodative monetary policy for an extended period of time,” he said, before adding the kicker that the ECB will “stand ready to adjust our policy stance further.”

Reinforcing Dr. Draghi’s outlook was Monday’s dismal data out of Europe’s largest economy. According to Germany’s Federal Statistical Office, German GDP contracted 0.2 percent in the second quarter. As goes Germany, so goes the euro zone, where inflation has fallen to 0.3 percent (its lowest level in five years) and manufacturing is struggling.

It’s not just Europe that could add stimulus. Bank of Japan Governor Haruhiko Kuroda faces similar pressures as Japan’s economy has failed to rebound after a sales tax hike prompted the sharpest economic contraction since the start of 2011.

Back at home, we expect the Fed’s band will keep playing its merry tune for now. The voting members of the Federal Open Market Committee in 2015 will be even more dovish than the current committee. If there is a risk, it is that the Fed will keep monetary policy at a high level of accommodation for longer than previously anticipated.

Financial markets heard the sweet song of easy money from Jackson Hole loud and clear, sending equities up strongly while driving U.S. Treasuries’ prices higher and yields lower. The recent high of the New York Stock Exchange Advance-Decline Line supports this optimistic hypothesis, suggesting that stock prices will continue to reach new highs.

The world’s central banks will be doing whatever is necessary to keep their economies from falling into depression or any other economic malaise. So not to worry: From what we heard in Jackson Hole, the world is a beautiful place and the easy-money band won’t stop rocking.

Bernanke Says 2008 Worse Than Great Depression

FDRMy Comments: Ben Bernancke is no longer Chairman of the Federal Reserve. However, before he became chairman he was widely recognized as a world class economist and an expert of the Great Depression. It was that expertise that gave him so much credibility as he maneuvered the Fed through 2008-2009 until earlier this year.

There is no question that many of us are still hurting. The gap between the haves and the have nots is increasing. The ability of many of us to spend money like we used to is limited, which to some degree keeps recovery uncertain.

There is blame to go around, but not because anyone or sector of the economy was and is evil. That presumes a conspiracy involving thousands of people which is enough to debunk that idea. Bad things happen from time to time. There is little point in worrying about the past; we can only influence the future, but an understanding of the dynamics that led to the mess may be helpful.

Brian Gilmartin, CFA, Aug. 28, 2014

http://blogs.wsj.com/economics/2014/08/26/2008-meltdown-was-worse-than-great-depression-bernanke-says/

The above link was copied and pasted from a Real Time Economics Wall Street Journal tweet yesterday (8/26), after Gentle Ben testified in the AIG litigation recently.

I think former Fed Chair Bernanke was right in concluding that 2008′s recession, if left to run its course, would have been a far greater calamity for the US economy than the Great Depression, but for different reasons:

1.) The money markets and the commercial paper market was at real risk of failure, which means S&P 500 companies couldn’t have rolled short-term high quality CP;

2.) Far more Americans through 401(k)s and pensions, had exposure to the stock and bond markets than Americans had in the late 1920′s and early 1930′s;

3.) A 70 year bull market in home prices came to a crashing halt, the first national real estate depressions since the 1930′s. While the US economy was thought to be a primarily agrarian economy during the Great Depression, single-family homes as a percentage of household net worth, would have been far greater in 2007 – 2008 than in the 1930′s;

4.) The truly shocking action for me wasn’t the Lehman default or even the Bear Stearns default, but the drop in Northern Trust’s and State Street’s stock in late September, early October, 2008. Northern Trust traded up to $88 in September ’08 only to collapse to $33 within a two week time frame. NTRS and STT are “global custodian” banks and thus are huge custodians (recordkeepers) for corporate pension plans and such, with far bigger assets in custody and administration than assets under management. If The Reserve Fund had broken the buck, there would have been true calamity in the Street and although it is simply a guess, I would have thought that the US unemployment rate would have seen 50% easily, at least over the near term;

5.) The Reserve Fund was, at that time (I believe) in 2008, one of the world’s largest money market funds, and if the Reserve Fund had “broken the buck” which means that if the Reserve Fund’s NAV had moved below $1 per share, it could have resulted in a run on money markets that would have made the bank run and the Bailey Building & Loan run (“It’s A Wonderful Life”) look like a day in the park. (The aftermath of what happened with the Reserve Fund in 2008 is that today, the SEC is contemplating and is close to letting money market fund NAVs (net asset values) float. The thought is that the $1 money market price creates a “moral hazard” and what I told a client recently is that what retail investors will likely wind up with is whole array of “ultra-short” bond funds as money market funds, which do fluctuate minimally in price.)

6.) Although some of the fiscal policy has been horrid since 2008, I do think that one of the root issues in the economic recovery following 2008 has been the true “shock” of the drop in real estate and household wealth. Remember consumption is 2/3rd’s of GDP and with the capital markets and the real estate markets, being two of the greatest wealth-creation vehicles post WWII (not to mention the value of an education), it is taking years for the consumer to restore their savings and confidence.

7.) The fact that “disinflation” (a declining rate of inflation) and deflation continue to be an issue 5 years after the stock market low and the substantial economic recovery, is indicative of lingering overcapacity. Part of that is due to the life-cycle of technology which has dramatically accelerated productivity and shortened tech product cycles (not to mention kept a lid on inflation) and part could be demographics and the Aging of America (it is a bigger debate);

8.) The Great Mistake in the 1930′s by the Federal Reserve is that they actually withdrew liquidity sometime in 1935 – 1936, which resulted in another downturn in the US economy in the late 1930′s just prior to WWII. In other words, Fed policy errors actually exacerbated the Great Depression, rather than shorten it. Both Janet Yellen (I’m sure), just like Ben Bernanke are / were both aware of the Fed’s policy mistakes and are obviously loathe to make the same mistake. The fact that there isn’t a meaningful inflation today just makes the Fed’s ability to maintain ZIRP (zero interest rate policy) and low rates that much easier. However it will end at some point, and we will get some inflation, I would suspect.

Most intelligent investors blame leverage on the 2008 collapse, but I think it was far more involved than that. It just wasn’t that simple.

In client meetings the last few years, I’ve been telling clients that there is less than a 5% chance that they will see the 2008 confluence of events happen again in their lifetime (probably less).

Certainly I could be wrong, but I continue to think the US economy, and the US stock market, particularly the S&P 500 is in a perfect glide slope of healthy, albeit subdued growth, low inflation, and a healthy respect for stock volatility and negative sentiment on the part of retail investors.

One commentator from PIMCO called it the “Goldilocks economy” and the metaphor seems appropriate.
We will see S&P 500 corrections over time, but I will bet in 10 years that we will look back and see this period of time as similar to post WWII economic stability and growth. Perhaps that conclusion is somewhat of a stretch given the demographics of the US economy today, but we’ll see.

Thanks for reading today. We’ve been contemplating this commentary on 2008 for some time. Watching NTRS and STT trade in late September, early October, 2008 was one of the few times, I’ve felt true fear watching the stock market. The potential collapse of the money market as was being telegraphed by the global custodian banks, would have been a horrific scenario to conceive, let alone experience.

When all the books are written about the “near Great Collapse of 2008″ after 20 – 30 years of hindsight, I do think Ben Bernanke, then Treasury-Secretary Hank Paulson, and Tim Geithner will be due a huge debt of gratitude.
For a few days/weeks, educated American’s had a brief look into the abyss. It won’t be forgotten by those of us that sat through it.

Before You Send Your Child Off To College…

108679-bruegel-wedding-dance-outsideMy comments: Yes, I know this should have been posted several weeks ago. But I didn’t have it then.

The advice come from an attorney in Michigan by the name of Julius Giarmarco whose website can be found HERE. I’m unsure how rules in Michigan differ from any other state but I suspect the fundamental thoughts he offers will apply to whatever state you either live in or where your child is enrolled.

If they have already left for college, put it on your to-do list for Thanksgiving or Christmas.

Before sending your child off to college, have him/her sign a General Durable Power of Attorney and a Patient Advocate Designation. Without them, under Michigan law, parents cannot make financial or health care decisions for a child who has attained age 18 (without probate court approval) – even though the child is still a dependent and still covered under the parent’s health insurance plan.

The General Durable Power of Attorney deals with financial matters. In the event of an unexpected disability, it allows the attorney-in-fact (presumably, one or both of the parents) to handle all of the student’s business, financial and school affairs, while the student is unable to do so. The attorney-in-fact must accept the designation in writing and acknowledge his/her responsibilities.

The Patient Advocate Designation allows the patient advocate to make the student’s health care decisions. Similar to the General Durable Power of Attorney, the designated patient advocate must sign an acceptance before he/she may act.

This document permits the patient advocate to make care, custody, and medical/mental health care decisions for the student when he/she can no longer make those decisions. It also permits the patient advocate to withhold or withdraw life support and to make anatomical gifts.

Compared with other college expenditures, the nominal cost of preparing a General Durable Power of Attorney and a Patient Advocate Designation could turn out to be a good investment when compared to the cost of seeking a probate court approved conservatorship or guardianship.

YOU WORRY ME!

CharityMy Comments: I’m very conflicted by current events in the Middle East. On one hand I’m a dove, sick and tired of the hatred and death and tribal motivations of the people involved. It also reinforces my discomfort about religion since the conflict always seems to be driven by a false belief that “my God is better than your God!”. What a crock of hoooey.

I joined this world in 1941, at a time when another evil became manifest, thanks to a certain Adolph Hitler and his band of merry men. If ever there was an ideology that was cancerous and needed to be excised before it left the barn, that was it. We did eventually, but it took millions of lives and countless treasure.

ISIS is the 21st century equivalent of that cancer. Left alone, it will metastasize and and while I don’t expect it to bring Western civilization to its knees as it believes, it will be a pain the ass, to put it mildly. So somehow this ideology has to be stopped. And I’m inclined to think it will be better to make the effort sooner rather than later, and worry about the consequences after the fact. It cannot be allowed to grow.

These following comments come from someone who expresses the entire issue in well paced words. And while today is a holiday for some, Labor Day, if you have time read his words and make a comment. Thanks.

By Captain John Maniscalco, American Airlines Pilot

I’ve been trying to say this since 911, but you worry me. I wish you didn’t. I wish when I walked down the streets of this country that I love, that your colour and culture still blended with the beautiful human landscape we enjoy in this country. But you don’t blend in anymore. I notice you, and it worries me.

I notice you because I can’t help it anymore. People from your homelands, professing to be Muslims, have been attacking and killing my fellow citizens and our friends for more than 20 years now. I don’t fully understand their grievances and hate, but I know that nothing can justify the inhumanity of their attacks.

On September 11, ARAB-MUSLIMS hijacked four jetliners in my country. They cut the throats of women in front of children and brutally stabbed to death others. They took control of those planes and crashed them into buildings, killing thousands of proud fathers, loving sons, wise grandparents, elegant daughters, best friends, favourite coaches, fearless public servants, and children’s mothers.

The Palestinians celebrated, the Iraqis were overjoyed as was most of the Arab world. So, I notice you now. I don’t want to be worried. I don’t want to be consumed by the same rage, hate and prejudice that has destroyed the soul of these terrorists. But I need your help. As a rational American, trying to protect my country and family in an irrational and unsafe world, I must know how to tell the difference between you, and the Arab/Muslim terrorist.

How do I differentiate between the true Arab/Muslim Americans and the Arab/Muslim terrorists in our communities who are attending our schools, enjoying our parks, and living in OUR communities under the protection of OUR constitution, while they plot the next attack that will slaughter MORE of the same good neighbours and children?

The events of September 11 changed the answer. It is not MY responsibility to determine which of you embraces our great country, with ALL of its religions, with ALL of its different citizens, with all of its faults. It is time for every Arab/Muslim in this country to determine it for me.

I want to know, I DEMAND to know and I have a right to know, whether or not you love America ….. Do you pledge allegiance to its flag? Do you proudly display it in front of your house, or on your car? Do you pray in your many daily prayers that Allah will bless this nation; that He will protect it and let it prosper? Or do you pray that Allah will destroy it in one of your Jihads? Are you thankful for the freedom that this nation affords? A freedom that was paid for by the blood of hundreds of thousands of patriots who gave their lives for this country? Are you willing to preserve this freedom by also paying the ultimate sacrifice? Do you love America?? If this is your commitment, then I need YOU to start letting ME know about it

Your Muslim leaders in this nation should be flooding the media at this time with hard facts on your faith, and what hard actions YOU are taking as a community and as a religion to protect the United States of America. Please, no more benign overtures of regret for the death of the innocent, because I worry about who you regard as innocent…. No more benign overtures of condemnation for the unprovoked attacks, because I worry about what is unprovoked to you. I am not interested in any more sympathy; I am interested only in action. What will you do for America – our great country – at this time of crisis, at this time of war?

I want to see Arab-Muslims waving the AMERICAN flag in the streets. I want to hear you chanting ‘Allah Bless America’. I want to see young Arab/Muslim men enlisting in the military. I want to see a commitment of money, time and emotion to the victims of this butchering and to this nation as a whole.

The FBI has a list of over 400 people they want to talk to regarding the WTC attack. Many of these people live and socialize right now in Muslim communities. You know them. You know where they are. Hand them over to us, NOW! But I have seen little even approaching this sort of action. Instead I have seen an already closed and secretive community close even tighter. You have disappeared from the streets. You have posted armed security guards at your facilities. You have threatened lawsuits. You have screamed for protection from reprisals.

The very few Arab/Muslim representatives that HAVE appeared in the media were defensive and equivocating. They seemed more concerned with making sure that the United States proves who was responsible before taking action. They seemed more concerned with protecting their fellow Muslims from violence directed towards them in the United States and abroad than they did with supporting our country and denouncing ‘leaders’ like Khadafi, Hussein, Farrakhan, and Arafat.

IF the true teachings of Islam proclaim tolerance and peace and love for all people, then I want chapter and verse from the Koran and statements from popular Muslim leaders to back it up. What good is it if the teachings in the Koran are good, pure, and true, when your ‘leaders’ ARE teaching fanatical interpretations, terrorism, and intolerance? It matters little how good Islam SHOULD BE if huge numbers of the world’s Muslims interpret the teachings of Mohammed incorrectly and adhere to a degenerative form of the religion. A form that has been demonstrated to us over and over again. A form whose structure is built upon a foundation of violence, death, and suicide. A form whose members are recruited from the prisons around the world. A form whose members (some as young as five years old) are seen day after day, week in and week out, year after year, marching in the streets around the world, burning effigies of our presidents, burning the American flag, shooting weapons into the air. A form whose members convert from a peaceful religion, only to take up arms against the great United States of America, the country of their birth. A form whose rules are so twisted, that their traveling members refuse to show their faces at airport security checkpoints, in the name of Islam.

We will NEVER allow the attacks of September 11, or any others for that matter, to take away that which is so precious to us — our rights under the greatest constitution in the world. I want to know where every Arab Muslim in this country stands and I think it is my right and the right of every true citizen of this country to DEMAND it. A right paid for by the blood of thousands of my brothers and sisters who died protecting the very constitution that is protecting you and your family.

I am pleading with you to let me know. I want you here as my brother, my neighbour, my friend, as a fellow American…… But there can be no grey areas or ambivalence regarding your allegiance, and it is up to YOU, to show ME, where YOU stand. Until then, “YOU WORRY ME!”

Gauging The Stock Market With The Tocalino Index

bruegel-wedding-dance-ouMy Comments: Football season is about to start, Ukraine is still bothered by the Russians, and Ferguson, Missouri is still a mess. So here I am talking about the stock market and an index I have never heard of before. I suspect you haven’t either.

But there is reference here to the Misery Index, which I have heard of, though never followed. It’s the sum of the unemployment rate and rate of inflation. Right now it’s pretty low in historical terms and getting lower. That’s good.

My next question has to do with why so many of us think the world is coming to an end. Well, maybe it is, but I doubt it. A changed world, definitely, but one we must adapt to and stop with the constant message of doom.

By Sebastiao Buck Tocalino, August 12, 2014

Summary
• Here I’m gauging the performance of the Dow Jones Industrial Average with the Help of the Tocalino Index (applying demographics to a variation on Arthur Melvin Okun’s Misery Index).
• The point that stands out recently is the noticeable gap between the rapid rise of the Dow Jones index and the lagging behavior of my own indicator from 2009 onward.
• The market seems to be feeding more on some sort of paranoia or complacency from the lack of investment alternatives than any demographic, business and economic fundamentals could ever support.

Among the many indicators that track the health of the economy, two are very popular due to the obvious affliction they may inflict on all of us regular Joes and Janes. They are: the inflation rate and the unemployment rate. Between the two of them, inflation is often the most conspicuous. After all, we routinely have to reach for our wallets to pay for our daily needs and those of our children, including education and a variety of goods and services. But, if the unemployment rate is somewhat less followed by those who hold on to a steady job, it is still the most distressing for the less fortunate ones who are out of work!

Arthur Melvin Okun was a professor of economics at the famous Yale University, later he was also an important economic advisor to presidents John F. Kennedy and Lyndon B. Johnson. Besides “Okun’s Law,” another well-known contribution of his to the tracking of economic trends was the Misery Index. Its formulation could not be any simpler or more intuitive: it was just the sum of the unemployment rate and the inflation rate. Naturally, to be out of work and having to cope with an escalating cost of life is a sheer disastrous situation leading to social distress, therefore the obvious choice of name for this indicator: the Misery Index.

(Some economists may say that, with a delay of one year or so, this Misery Index, with its implicit social distress, would be a contributing factor to swings in the rate of crimes. I tend to believe that crime is still more related to cultural issues.)

Personally, I don’t usually pay much attention to this index and believe that few people actually do. Though we pay close attention to its two constituents separately. But for some time recently, I have been glancing at the Misery Index and its downward trajectory in the U.S. It is clear that, in spite of all the insane efforts in printing money and keeping real interest rates negative and punitive for the more cautious and conservative majority of savers, inflation is still modest and below the target aimed by the FOMC and the Federal Reserve. By the end of June, the twelve-month inflation climbed a tad higher at 2.07%. Data relative to the closing of July is scheduled to be released only on Aug. 19.

At the closing of June, to the cheers of everyone, the unemployment rate had also fallen to 6.1%. It did rise slightly to 6.2% in July, as reported on Aug. 1.

Trying to avoid much of the noise in inflation data, I will adopt from now on the 12-month core inflation rate, which excludes the more disruptive cost swings of food and energy (due to the villainy of oil prices). The core inflation for the 12 months ended last June was of 1.93%. By using that same month’s unemployment rate of 6.1%, the sum has resulted in an 8.03% Misery Index.
Misery Index

CONTINUE-READING

The Typical Household, Now Worth a Third Less

My Comments: You have read my posts before where I talk about income inequality  (the HAVES vs. the HAVE NOTS) and how if left unchecked, could result in social chaos in this country. Probably not in my lifetime, but definitely affecting the lives of my grandchildren. It’s an issue that demands discussion among ourselves and those who profess to be politically motivated.

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

The inflation-adjusted net worth for the typical household in 2003 was $87,992. Ten years later, in 2013, it was $56,335. This is a 36 percent decline in very few years, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94 percent of the population had less wealth and 4 percent had more.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss