[ekianjo]

> increasing stock prices disproportionately benefit the wealthy and widen the gap between rich and poor.

Everything including stock prices disproportionately benefit the wealthy and widen the gap between rich and poor. Not sure what kind of point you are trying to make. When you are much richer than anyone else, you are bound to keep growing your assets at a faster space than anyone else too. It's the nature of compounding.

[WalterBright]

Percentage-wise, it grows at the same rate for each investor.

[manigandham]

Sure but capital is the single biggest factor in market returns.

More money means more ways to make more money by taking larger bets, using more leverage, waiting longer to turn losers into winners, and generally absorbing more risk to generate more return.

[WalterBright]

The leverage you can do is the same whether a small or large investor. Check out "margin percentage" on various brokerage sites.

[manigandham]

It's not the same. For example, I have Portfolio Margin [1] which gives me much greater leverage than normal Regulation T accounts, and that's just as a personal trader. You unlock even more access and advanced strategies as you gain capital all the way up to 10s of millions.

1. https://www.tdameritrade.com/investment-products/margin-trad...

[WalterBright]

I think if you work through the numbers, the risk level to the brokerage is the same. For example:

"But the goal is to align margin requirements with your portfolio's overall risk, based on the net exposure of all positions, and not just on individual positions. Portfolio margin is available to qualified investors who meet our minimum requirements and have $125k or more in total equity."

And by "qualified" investors they likely are looking at your other assets to see if they can be used as collateral. Note that if you go negative with your brokerage account, they don't just swallow the loss, they'll come after everything you have.

[manigandham]

Risk level to the brokerage is different from margin requirements and leverage, but they do trust you more. They don't look at or even know about any other assets though. It's based on your account size, trading experience and strategy. And of course negative balances are always owed.

But the point is that more capital does give you more leverage. The next step is $5M+ mark when you get even more access to trading vehicles.

[chii]

the wealthier you are, the more you are able to diversify, and also to "safely" leverage to gain more.

[WalterBright]

Diversification lowers your rate of return to the mean. Hedging lowers your risk by lowering your rate of return.