Investing - Theory, News & General • Re: Does the stock market create real wealth?

P.S. Because of the fear of market's taking it back, my current action is to spend the wealth that the market creates so that it would not be able to take it back.

I modeled this using CRRA utility1 to maximize satisfaction for both an average person and an extremely risk averse person. In order to get the effect you describe as a rational choice, you would need expected risky asset volatility of 35%+ in both cases. Historically over long terms, diversified US equities have had a volatility of around 15-20%, which is around half the required level.

1. Pratt, J. W. (1964) Risk aversion in the small and in the large. Econometrica 32(1/2), 122-136. https://doi.org/10.2307/1913738

Statistics: Posted by dgourd — Wed Sep 23, 2026 9:02 am