Over Half of Americans Don’t Own Stocks or Equity Funds

At a time when the US stock market is still flirting with record highs, more than half of Americans are sitting on the sidelines, with nothing invested in stocks, equity mutual funds or ETFs. A Bankrate.com survey released last Thursday found that 52% of those polled said they are not currently investing in the stock market – not individually nor through their IRA or 401(k) – up from only 33% on the sidelines in 2002.

More American adults drink coffee daily (61%) than have money invested in the stock market. Stock ownership peaked in 2007, just before the worst of the financial crisis and Great Recession, according to data from the Federal Reserve.

Among those not currently putting money into stocks, 53% said the reason was they simply didn’t have the spare cash to do so. Seniors were more likely than their younger peers to say they didn’t have the money to invest. Over 20% of respondents said they didn’t invest because they lacked understanding of how the markets work.

The latest Bankrate poll also found that 9% of non-investors said their skittishness was rooted in a distrust of stock brokers or advisers, while 7% said they avoided the market because they believed it was too risky.

For most Americans, especially younger ones, the decision not to invest in stocks is a big mistake. US stocks, in general, have a very long history of appreciating over time. Contrary to what many Americans believe, stocks aren’t only for the rich; even if one starts small, investing in stocks through mutual funds or ETFs can help build wealth over the long term.

Yet while the percentage of Americans who are currently invested in the stock markets continues to fall, the outstanding value of privately owned stocks, equity mutual funds and ETFs adds up to a record total of $21.17 trillion, according to the latest Federal Reserve data.


Americans in general today have the lowest level of stock ownership in 18 years. Yet stock ownership for the wealthy is at a new high – and that has accounted for much of their good fortune compared to the rest of America.

Fully 93% of the wealthiest 10% of Americans own stocks and/or equity funds. That’s nearly twice the level for the middle 50% and far more than the 26% stock ownership rate for the bottom 40% of income earners.

Stock ownership is even more concentrated when it comes to the wealthy’s share of total stock holdings. According to the latest data available, the top 10% of Americans by net worth own 81% of all directly or indirectly held stocks at the end of last year.

Those who have stayed in stocks – whatever their wealth level – have generally done the best in the recovery. Among the top 10%, the mean value of stock holdings soared to $975,600 in 2013 (latest data available), up from $834,800 in 2010.

My point today is simply that it is a good idea to have a portion of your portfolio invested in stocks, virtually at any age. The problem is that stocks can be quite volatile and undergo periodic sharp downward corrections and serious bear markets from time to time.

Wall Street argues that you simply “buy-and-hold” and ride out the occasional corrections and bear markets. Unfortunately, such downward moves can eclipse 50% as we saw in the bear market of late 2007-early 2009. Even the most die-hard buy-and-holder can have his/her patience tested in such a scary downturn.

No wonder then that over half of US investors don’t own stocks or mutual funds today. I have argued for over 20 years that investors should have a significant part of their stock and bond portfolios allocated to strategies that can move out of the markets from time to time to the safety of cash (money market), or ‘hedge’ long positions.

With US stocks and bonds at or near historic highs, and with financial risks rising around the world, it’s time to take me seriously. You don’t want to have all of your portfolio in a long-only strategy that will get hammered if we have a significant downward correction or worse.

Call one of my trusted Investment Consultants at 800-348-3601, or check out our website at www.halbertwealth.com.


US Job Openings Hit 14-Year High in February

While last Friday’s unemployment report for March was a huge disappointment with only 126,000 new jobs created last month, the Labor Department had some good news to report on Tuesday. The Bureau of Labor statistics (BLS) reported that the number of job openings in the US hit a 14-year high of 5.13 million in February,…

Contrary Opinion: The Bullish Case For The US Economy

As I have pointed out often over the last month or so, US economic data so far this year has been decidedly disappointing overall. There was good news on the jobs front and the unemployment rate fell to the lowest level since 2008, but that was about the only bright spot. As a result, most…

Silence Falls On Chicago’s Futures Trading Pits

When I finished my Master’s degree in international business (Thunderbird), I went to work as a grain merchandiser for Continental Grain Company. As such, I bought and sold grain (corn, wheat, soybeans, etc.) all across Texas, Oklahoma, Kansas, Louisiana, New Mexico, etc. Those purchases and sales had to be hedged on the futures markets in…

Fed Turns Dovish On Interest Rate Hike

The Fed’s policy statement released at the conclusion of yesterday’s meeting came as a surprise. While the Fed Open Market Committee (FOMC) did remove the word “patient” from its guidance on when the first rate hike might happen, it added additional language that suggests a rate hike won’t happen anytime soon. In the very first…