Thursday, April 21, 2011

Gallup Poll: Percent of Americans Owning Stocks Lowest Since Poll Started in 1999

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It is often said the U.S is a stock ownership society as "60-65%" of the people own stock.  I've often argued that is misguided since quite a few might own $2200 in a ROTH IRA or $3400 in a workplace 401k.  [Mar 9, 2010: Nearly Half of Americans Have Less than $10K for Retirement, a Quarter Less than $1K]    While this technically puts them in the 'stock ownership' society, it's really a size stake that is not going to affect their lives but it makes for good story when we say "Main Street = Wall Street". 

Last November, as The Bernank told us he will make us all rich as he could push asset prices upward.... sorry, I mean stock prices upward (his actions have no effects on commodities - just ask him)... we showed how skewed any wealth effect would truly be to the top end of the economic pie.  With the top 1% owning 38% of equities, and the next 9% owning 43%, about 80% of the Bernanke magic would accrue to the top 10% of society.  (I am sure most readers are in the top 10%, so I assume we should be giddy)  But if we are being honest with ourselves, the true 'stock ownership' society is that top 10%.

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Of course the dollar devaluation and rise in commodities (which again, the Fed has made clear they have NOTHING to do with) happening concurrent to the global liquidity flood, is having real effects on Main Street- but this time on the other side of the economic food chain.  While the widely quoted company line is food and energy costs are a far smaller proportion of a person's expenses in the U.S. (true in the aggregate) than in other countries, it really depends about *which* Americans are you talking about.  Those who can least afford inflation in said areas, are the ones taking the most dramatic hit.  And you can bet they don't have Etrade accounts to offset the pain they are experiencing in their daily expenses.

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But going back to the stock ownership thesis, a new Gallup poll shows the lowest percentage of Americans owning stocks since the survey started in 1999, at 54%.   It has been a dramatic drop since 2008.  This should not come as a surprise as a lot of former stock holders were most likely former middle class working Americans.  I assume many had to liquidate what little they might have had in markets to help pay the bills.  Others may just have given up altogether on the market after a decade of bubbles and collapses in a marketplace dominated by 'long only' instruments.

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So to review, the stock ownership society is just over 50%ish of Americans.  That figure is heavily skewed to the top 10%, which own 80% of the assets.  The overall ownership rate has fallen sharply the past few years as fewer people partake.  But the vast majority of that 50%ish has relatively small amounts of Netflix stock and hence the Bernank's "wealth effect" (apparently the third Fed mandate) continues to accrue to a small segment of the population.  While his war on the dollar (a store of our savings) punishes many more in the populace.  All in all, par for the course in Cramerica.

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