I subscribe to the theory that the fundamental shifts in wealth can be traced back to two changes in our tax laws that have allowed the well-connected, well-placed to take advantages of those tax laws.

1 - Tax deductions for contributions to retirement programs

2 - Capital gains taxed at lower rates than dividends

Change #1 is magnified by the fact the baby boomer generation is the largest generation - this means there is a huge chunk of money coming in every month buying equities and bonds. This generates billions in fees for Wall Street and the supply/demand ratio generates booms and busts which are magnified by program trading. In order to generate decent returns on the bond/income side - schemes such as improperly rated sub-prime loans that were packaged in ways to make the return on investment an attractive alternative to CD rates that plummeted due to the Federal Reserves fiscal policies to prop up our weak economy.

Change #2 - Many corporations are sitting on profits (or used for stock-buy backs) rather than pay dividends (or keep dividends low). Sitting on the profits encourages corps to acquire competitors which drives down competition and leads to "too big to fail". We go along with this because if we were paid dividends, they would be taxed at our marginal rate.

Note that since 1999, the S&P 500 has bounced between 1,000 and 1,300. Where has all that money that we have put into our retirement accounts gone? Transaction fees, market manipulations, derivatives, hedge funds.

There is no free lunch, trying to "game" the system, timing the markets amounts to gamblers believing they can beat the casino. Clean up the tax laws, pay dividends, and require banks to borrow from the Fed at reasonable rates.