Almost Half of Americans Are Missing Out

A Gallup poll found that only 54% of American households own stocks. For the rest of Americans, paying today’s bills replaced investing in the future.

Stocks can create vast wealth. Almost a quarter of the names on the Forbes list of richest Americans work in finance. But many average Americans aren’t part of this wealth-creation machine.

A Gallup poll found that only 54% of American households own stocks. That’s down from a 2007 high of 65%.

A Gallup poll found that only 54% of American households own stocks. After the brutal bear market in 2009, they may be more cautious.

Some potential investors fear stocks. After the brutal bear market in 2009, they may be more cautious. But fear only accounts for some of the ownership decline. There was also a bear market in 2000, and after that ended, more than 60% of households still owned stocks.

Some groups still buy stocks. Gallup noted: “Adults aged 65 and older and those with an annual household income of $100,000 or more are two groups whose ownership rates have held firm.”

Older Americans face different problems than younger families. Their homes are often paid for, but they still need income for unpredictable expenses. Their need for income may force them to hold savings in stocks.

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Households with income above $100,000 are generally in the top 25% of households ranked by income. High-income earners suffered less in the stagnant economy of the past few years.

For the rest of Americans, paying today’s bills replaced investing in the future. This can be bad for them in the long run, but it could be bullish for those with money invested in stocks now. Low investment rates mean there are many potential owners out there. They’re the families who could invest if wages rise. If that happens, a rising tide could push stock prices up significantly.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

  • jringo55

    Investing in the stock market is like going to the casino. The odds are not in everyone’s favor to win. The odds are on the house to win. Investing in the market is not a sure shot. It never has been. For some to win in the market, others commonly have to lose. 2008 changed investing to the extreme. People on main street lost big. Some of them lost forever and with no hope of recovery. People don’t take to losing all they have saved toward their retirement very well. Some just refuse to risk being taken again. Invest at your own risk can be equally said, gamble at your own risk. I’m not a gambler. Many other’s just don’t have disposable income to invest with. I think that will remain and possibly even get worse. The market is for players. People who can’t afford to lose should not play.

  • Michael Carr

    It’s not true that for some to win in the stock market, others must lose. That is true in a zero sum market such as the commodities futures market. A stock market can grow and create wealth for everyone. For example, in a country where GDP is growing, even by a small amount, it is possible for all investors to win in the stock market. But, you are correct that risk is real. In the stock market, there is a possibility of loss. In a saving account, when interest rates are below the rate of inflation, there is a guarantee of loss. Individual investors and savers are accepting guaranteed losses and ignoring stocks could create financial hardships in retirement.

  • jringo55

    The market cannot climb forever. The market always has a ceiling and from there it falls. AKA — Recession. That’s where people lose the bulk of their money. Recession will come. They always do. There will be people who lose in the recession. The market will take them out as the recession always comes without warning.

  • Michael Carr

    Talk to me about robo traders. Tell how much they skim from the market daily?

    Robo traders are market makers. We changed the market structure to eliminate floor traders for the most part. In the olden days, I faced spreads of an 1/8 or a 1/4 or more. This was a minimum trading cost of $0.125 per share. Robo traders have narrowed the spreads and we all win because of that. Academic studies show that. I know they aren’t popular but I love robo traders more than the old market makers who made an 1/8 or more every time I traded.

  • jringo55

    Robo traders are trading penny stocks by the hour. The game is rigged. I refuse to be in it.