Bankrate Survey: Individual Investors Think Stock Market Is Rigged

EDITOR NOTE: According to a Bankrate survey, around 50% of non-institutional American investors believe that the stock market is rigged against them. We agree that it’s rigged, but not directly rigged “against” the average investor simply because it’s one area an investor can still experience growth if s/he does it right. Aside from that, however, these smarter investors--many of them younger--still don’t see the big picture. They attribute the growing wealth inequality to the stock market. That’s a secondary effect. Here it is: the stock market may be rigged, but what’s weighing on the average American--in other words, what’s rigged against the average American--is THE ENTIRE MONETARY SYSTEM! They need to realize, no, we’re not losing the battle. We’ve actually lost the war...and it was lost a long time ago...beginning in 1971, when currencies were allowed to float freely. And although you can still make money in the stock market in a bull market, unless you’re hedging the debasement of your currency with non-CUSIP gold and silver, the value of your cash-derived investments will only be smaller over time. That’s the hard truth. The sober truth to which most American investors are completely blind.

Nearly 50% of Americans now say the stock market is "rigged against individual investors," a new survey from Bankrate.com and YouGov shows — and surprisingly a solid majority of those investing in the stock market (56%) believe the market is rigged as well.

Why it matters: Underlying the results is "widening wealth inequality where young people in particular just may not have a sense of hope or fairness in the markets," Greg McBride, Bankrate.com's chief financial analyst, told Axios.

• "This recession, even more so than most recessions, has widened the gap between the haves and the have-nots, and the recovery that we’re seeing is very much a K-shaped recovery, the fortunes of some are worse than ever, the fortunes of others are better than ever."

In addition to the growing wealth inequality seen since last March, people are also talking much more about the subject, says former Federal Reserve economist Vincent Reinhart.

• "If we’re talking more about wealth inequality, it wouldn’t be surprising that that conversation included, 'What is it about the system that prevents a more equal distribution of wealth?'" Reinhart, now chief economist at Mellon, a subsidiary of $2 trillion asset manager BNY Mellon, tells Axios.
• "One part of it is if you start with a pool of wealth, you have something to accumulate more wealth upon. If you start without one, you don’t."

Details: Just 13% of those surveyed (more than 2,500 U.S. adults, weighted by quotas to provide a nationally representative sample) disagreed with the idea that the stock market is rigged against individual investors, and just 5% strongly disagreed.

Yes, but: The survey's respondents are largely individual investors, not big-money institutional or professional asset managers.

Between the lines: Those with higher levels of education were most likely to agree that the stock market was rigged, with 58% of those with a college degree or more saying the fix was in against mom and pop investors.

• Americans with higher incomes also were more likely to agree — 53% of those from households with income of $50,000 or more annually said the market was rigged.

Watch this space: "One negative consequence is that … you see a lot of risk-taking behavior," McBride said.

• "Certainly the GameStop frenzy over the last couple months, particularly in late January, the notion of squeezing the hedge funds or other institutional investors."
• "That idea of individual investors banding together to go up against whoever they perceive as the villain, I think that could likely be a consequence of that sentiment."

Originally posted on Axios