Individual Investors Own Only 1/3rd of US Equities - Record Low

I think this is a combination of (a) terrible returns the past decade [Mar 26 - WSJ: Stocks Tarnished by Lost Decade] and (b) more and more people in American losing the ability to save/invest as the cost of life outpaces their wages. I truly believe many people never came back to the market after the NASDAQ bubble and now the multiple bubbles the brains on Wall Street (with help from the Federal Reserve easy money policies) have created, first in the stock market and then in the real estate market, have wiped out many people. Taking 2 hits like that in a decade is simply untenable. But you combine a financially illiterate populace with sophisticated people on the opposite side of the trade willing to take their money at will and you have "free markets" at work. Great transfers of wealth ensue and we cheer.

It probably will shock many that individuals own only about 1/3rd of shares in the US markets; as the blurb below says - this is now a game for and by the institutions.

• Individual ownership of U.S. stocks has fallen to a record low. The decrease in ownership underscores the importance of institutional investors in domestic equity markets, according to the Financial Times.

• At the end of 2006, retail investors owned 34 percent of all shares and 24 percent of stock in the top 1,000 companies; record lows. Compared to individual investors in 1950, who owned 94 percent of all stocks and 63 percent in 1980, the percentage rates in 2006 are exceptionally low, according to a report of by the Conference Board.

• Pension funds, investment companies, insurance companies, banks and foundations, held 76 percent of the shares in the largest 1,000 companies, up from 61 percent in 2000, according to the report. The 66 percent share of all stocks held by institutions was up from 63 percent two years before.

• Pension funds representing state and local government workers have grown especially rapidly, lifting their share of equities from only 2.9 per cent in 1980 to 10 per cent