In just a few weeks, Wall Street has gone from optimism that the U.S. and Israeli strikes against Iran were a temporary blip to more pessimism that the chaos in the Middle East could have long-term consequences.
Likewise, consumers already sensitive to the cost of living are facing another affordability issue as oil and gas prices surge as supplies in the region are constrained.
As Larry Fink wrote today in his annual letter to shareholders: “We are living through a period in which the events of a decade have become commonplace: wars affecting the globe, trillion-dollar companies, a fundamental reorganization of international trade, and the emergence of the most important technology since at least the computer.”
Frankly, it’s hard to keep up – the BlackRock CEO writes that the drama and uncertainty surrounding daily headlines can obscure longer-term trends.
Fink is worth $1.3 billion ForbesSays that historically the vast majority of wealth has gone to those who own assets rather than those who work to make money. He observed that since 1989, the value of a dollar invested in the U.S. stock market has surged to 15 times the value of a dollar tied to the median wage. In the age of artificial intelligence, this wealth effect will likely be the same, with those with enough wealth to invest in the technology seeing their portfolios benefit the most from rising asset prices.
As a result, the BlackRock founder writes: “This is the root of much of today’s economic anxiety: a deeper sense that capitalism is working, but just not working for enough people.”
Fink said that for individuals looking to make a quick buck in the roller-coaster stock market by buying the dips and selling the highs, they won’t reap the same benefits as those with historical wealth: “Focusing on short-term investing isn’t going to solve the problem.” The BlackRock CEO noted that over the past two decades, every dollar invested in the S&P 500 has grown more than eightfold. But if investors missed the market’s best 10 days, they would get less than half the return.
Therefore, “maintaining investment is far more important than getting the timing right.” “Long-term investment allows countries to build domestic industries, allows people to accumulate lasting wealth, and shows that the country’s growth can also benefit them.”
Fink’s vision of the changing nature of capitalist sentiment echoes research on the American Dream. In 2024, the Pew Research Center asked nearly 9,000 respondents whether the American Dream exists, and only a slim majority (53%) said the American Dream is still achievable. Forty-one percent said the American Dream was once possible, while 6% said it has never been a reality.
