Phillip Q. Shrotman

 

 

What Percentage Of Americans Own Stocks?

"FACT: Most Americans don’t own any stocks. Instead of celebrating whenever the Dow Jones goes up, we need to focus on bringing investment and good jobs to the areas of this country that haven’t been part of the economic recovery."

The "distribution of stock ownership by wealth percentile," specifically 84 percent for the "top 10 percent," 9.3 percent for the "next 10 percent" and 6.7 percent for the "bottom 80 percent."

The data stems from a peer-reviewed academic paper. However, when we took a closer look, we found the data doesn’t directly support the claim that "most Americans don’t own stocks." In fact, the actual data on that question shows that a small majority of Americans do have a stake in the stock market. The data comes from a paper published in November 2017 by New York University professor Edward N. Wolff.

One of the paper’s findings was that "despite the fact that almost half of all households owned stock shares either directly or indirectly through mutual funds, trusts, or various pension accounts, the richest 10 percent of households controlled 84 percent of the total value of these stocks in 2016." A key contrast: While about half of households own stocks in one way or another, the richest Americans hold the lion’s share of the value.

This highlights the imbalance in the value of stock holdings, but his headline claim is about the reach of stock ownership throughout the population.

Even if you don’t own or trade individual stocks, there’s a decent chance you have a 401(k) account or an Individual Retirement Account or belong to a pension fund that is invested in stocks.

"Many individuals have an indirect interest in the stock market by means of their claims on pension funds that own stocks and use these stock positions to fund pension payments," said Hendrik Bessembinder, a professor at Arizona State University’s W.P. Carey School of Business.

A once-every-three-years study by the Federal Reserve Board found that in 2016, 51.9 percent of families owned stocks, either directly or as part of a fund.

And in 2017, Gallup found that 54 percent of respondents owned stocks either directly or as part of a fund. Those findings show a majority owning stocks — a modest majority, but still a majority.

 

The Federal Reserve Board study found that about one-third of families in the lower half of the income scale had stock holdings. In the next 40 percent of the income scale, about 70 percent of households held stocks, while households in the top 10 percent of the income scale had stock ownership rates above 90 percent.

Gallup, meanwhile, found that certain subgroups were notably less likely to own stocks, including those without a college education, younger Americans, unmarried Americans, African-Americans, and Hispanics.

To be precise, a narrow majority of Americans does own stocks, according to credible recent studies. But, there is a point that Americans of modest incomes are significantly less invested in the stock market than wealthier Americans are. Other large groups, including minorities and those without a college education, also lag in stock ownership, meaning that the stock rally is largely passing them by.

PQS