ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

What Happens on Wall Street Does Not Stay on Wall Street

Updated on April 6, 2008

Wall Street and Main Street are more linked than you may think.

With all the recent news of pain and suffering coming from Wall Street the rest of the country isn't exactly floating on Cloud 9 on Main Street. The unfortunate part of all of this is the prevailing belief that Wall Street is full of money-grubbing capitalist swine and they are the reason that your pockets are feeling pinched so far this year. We crave another Enron scandal in the news. We can't to wait riot in the streets with torches and take down the latest investment banker or corrupt CEO who's destroying his employee's pension plans. When these things happen, believe me, I'm right there beside you lighting my torch off of yours.

But while there are certainly the Fat Cat types on Wall Street you wouldn't want to touch with a ten-foot pole, most of this is untrue. I know, I know... it's hard to sit back and watch people with six- and seven-figure incomes and not have feelings of resentment and hatred. When they go down and we're hurting we want to think they must be causing this to make a big buck off of us.

The truth is so many elements lead to a market crash, or a recession, that to blame Wall Street is not even half of it. When economic conditions worsen and the market gets hit all those nice bonuses that make up the real salaries of these people start to disappear. There's not a banker, broker, or beggar on Wall Street willing to throw away their bonus in order to keep the poor poorer. In fact, Wall Street does work for the little guy. Think of all your retirement accounts, mutual fund investments, and perhaps pension plans. When Wall Street does well these things also do well... very well. Your 401(k), for example, is directly linked to market performance. And as I said earlier - when the market is up these guys' bonuses are way up. When the market is up, your 401(k) and pension and IRA accounts and all sorts of neat little piles of forgotten monies you're stashing away for retirement are also way up.

The point of all this is when Wall Street is hurting Main Street feels the pain as well. An unfortunate side effect is the anger, resentment, and hatred for those "in power" who supposedly caused all of this. The general public has little knowledge of how major investment firms or hedge funds work, and the mystery of it all can easily fuel negative emotions. But there is great potential for these institutions to help the middle- and lower-classes.

The potential for Wall Street to help us out.

Let's look at an example. In 1998 the University of Chicago, my Alma Mater, had an endowment of around $2 billion. By last year this endowment was about $6 billion. So in a little over 8 years people gave 4 billion dollars to this schooL? Absolutely not. Take Yale for instance. Last year they posted returns on their endowment of over 20%! Their endowment is massive, it dwarfs University of Chicago's. These endowments grew in part because of Wall Street. Institutional investing means just that: these institutions invest their money in the market, and some Wall Street bankers actualize impressive returns.

Now I know what you're thinking: so what, these are elitist schools and where there's money and power there will always be a glass ceiling. But what does this mean for Main Street? These endowments are what pay for the brunt of financial aid to lower income students. This means that the brilliant kid sitting in an inner-city high school classroom with no hopes of affording college can attend one of these universities for next to nothing. The ability to grant access to the best schools in our country to over-achieving students with little to no financial abilities is incredible. The potential for institutional investing to shatter these types of glass ceilings and help make higher education more affordable for the most deserving students is there. The more returns universities see from investments, the more scholarships go to students in need. So when Wall Street does well these students receive the chance of a lifetime.

What's in store for us in the future?

I have more good news. Market conditions such as this generally signal a bottom,meaning these low levels are temporary. The market usually bounces off these so-called bottoms a couple of times before swinging around and rallying upward for another couple years. The best thing about this is a market bottom should be like a bargain bin for anyone who's not invested, or only partially invested. Now's the time to come in and do a clean sweep of some major companies, excellent mutual funds, and strong ETFs that are at historic low prices.

The next few years should be pretty exciting for the average investor. If you're sick and tired of leaving your financial fate in the hands of Wall Street then do a little research and get your hands dirty. A couple weeks' worth of reading, some free information on the web, and a reassessment of your investments on a monthly or quarterly basis will put you in a much better financial position than most other people in this country. I have another article about investing, mutual funds, and ETFs that should get you started. I warn you, it's not the best writing in the world - it was more or less just a set of notes or guidelines I published in a nifty little link for friends of mine who kept asking me for financial advice. But it should get you started, and I am always open to comments, questions, or requests for more in-depth information.

Good luck, and happy investing.

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)