New York, December XX, 2022 — The Oliver Wyman Forum, Oliver Wyman’s research and leadership community, today unveiled a groundbreaking way of thinking about the US equity market and a new explanation of the dynamics of wealth accumulation and destruction over the past 100-plus years.
“A Radical New Perspective on Equity Prices And the Dynamics of Wealth Accumulation” is the fourth in a series of five white papers that, taken together, provide one of the most comprehensive analyses of the US financial markets ever developed, combining finance, accounting, analytics, economics, history, and sociology.
By placing financial assets within sociologist Abraham Maslow’s Hierarchy of Human Needs, the authors show that equities can be thought of as consumer goods whose dynamics are heavily influenced by income inequality. The same thought process allows the authors to create a new valuation metric for equities that outperforms traditional ones.
The authors also show that high-and-rising income inequality is the most important driver of high saving rates into financial assets, and that inflation doesn’t increase savings rates quite enough to compensate for the erosion of real asset values.
At the same time, the paper also shows that 100-plus years of data do not support famed economist Thomas Piketty’s “fundamental force for divergence” theory for the United States. The country is not likely to go back to Victorian England levels of inequality in the future.
Finally, the paper serves as an essential steppingstone to paper five, which will introduce the Holistic Market Model and associated tools for short-term traders and long-term investors to better manage future uncertainty.
About the Oliver Wyman Forum
The Oliver Wyman Forum is Oliver Wyman’s think tank, dedicated to building leadership communities to drive new solutions to shared global challenges. The Oliver Wyman Forum engages leading thinkers and develops new research to inspire action based on innovative insights on three fronts: Reframing Industry, Business in Society, and Global Economic and Political Change. Together with our growing and diverse community of experts, we focus on making a difference. For more ideas, sign up to receive Ready or Not, our monthly newsletter, follow us on LinkedIn, or visit www.oliverwymanforum.com.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.