In just weeks, Wall Street has gone from optimistically waving off the U.S. and Israel’s strikes on Iran as a short-term blip to the more pessimistic assumption that the chaos in the Middle East could have long-term ramifications.
Likewise, consumers—already sensitive to the cost of living—are struggling with yet another affordability issue as oil and gas prices shot up after supply from the region was restricted.
As Larry Fink wrote in his annual letter to shareholders today: “We are living through a period where things that would’ve defined a decade have become routine: wars with global repercussions, trillion-dollar companies, a fundamental reordering of international trade, and the advent of the most significant technology since, at least, the computer.”
Frankly, it’s been hard to keep up—and the BlackRock CEO wrote that the drama and uncertainty threatened by day-to-day headlines may be obscuring longer-term trends.
Fink, worth $1.3 billion according to Forbes, said that the vast majority of wealth historically has flowed to people who owned assets, as opposed to those who earned their money by working. Since 1989, he observed, a dollar invested in the U.S. stock market has ballooned at 15 times the value of a dollar tied to median wages. This wealth effect will likely be the same in the age of AI, with those wealthy enough to invest in the technology seeing their portfolios benefit the most from increasing to asset prices.
As such, the BlackRock founder wrote: “This is where much of today’s economic anxiety comes from: a deeper feeling that capitalism is working—just not for enough people.”
For individuals looking to make a quick buck in the rollercoaster stock market by trying to buy the dips and sell the peaks won’t see the same benefits as those holding historical wealth, Fink said: “A focus on short-term investing is not a fix for that.” Over the past two decades, the BlackRock CEO noted, every dollar invested in the S&P 500 grew by more than eight times. But if an investor were to have missed out on the 10 best days of the market then they would have earned less than half that return.
As such, “staying invested has mattered far more than getting the timing right,” and as such, “it is long-term investing that allows countries to build domestic industries, that lets people build enduring wealth and shows how their country’s growth can benefit them too.”
Fink’s take on the shifting nature of capitalist sentiment is echoed by research into the American Dream. In 2024, Pew Research asked nearly 9,000 respondents if the American Dream existed, and only a slim majority—53%—said it was still achievable. 41% said the American Dream was once possible, while 6% said it was never a reality.
There was also a marked split in opinion: Those with a college level of education, who were defined as having higher levels of income, were notably more optimistic about the possibility of achieving such a goal.
A foot on the ladder
U.S. citizens are uniquely placed to benefit from the largest economy on earth and its domestic but globally market-leading businesses. However, Fink wrote that many households don’t have enough cash on hand to make ends meet—let alone any left over to invest in volatile markets over a sustained period of time.
A BlackRock survey of 1,000 voters conducted in January found that one-third of respondents don’t have $500 dollars on-hand for an emergency like a car repair, Fink said: “In fact, many are forced to pull money out of the markets just to make ends meet. Last year, a record number of workers withdrew money from their 401(k) plans so they could cover financial emergencies. The challenge is saving enough money to invest in the first place.”
The creation of products like Trump Accounts will help families get a foot on the ladder to long-term investing, Fink said. However, a major lever which could be used to foster wealth creation and potentially address income inequality is Social Security.
Fink mused on the current structure of the program, which “emphasizes stability and predictability.” He added: “What it doesn’t do is let people grow their benefits along with the broader economy. The question is whether the Social Security system could allow both. Could a portion of the system be invested more like other long-term pension plans—carefully, broadly, and over decades—while ensuring the program remains a strong safety net?”
This is by no means a bid to privatise social security, Fink said, but some state and local government employees already contribute to public pension schemes which are invested in diversified portfolios: “If long-term investing is already helping millions of public servants build retirement security, it raises a reasonable question: Why shouldn’t more Americans have access to that same kind of long-term growth?”
