In MJGs post on Las Vegas (excellent by the way)he mentions that according to the organizers only 52% of Americans own individual stocks. I had heard that number on CNBC but thought it referred to equities including stick and balanced funds. If it just refers to individual stocks the number is less alarming. We have all heard that in the last few years only the rich are getting richer because they are the ones that own stocks. i have and do believe it but I do think that if the 52% is just holders of individual stocks the situation may not be so bad as I actually thought since I suspect that a great majority of 401ks and IRAs contain some stock and/or balanced funds (including target retirement)j
Comments
You correctly stated that I quoted the 52 % stock ownership statistic from a presentation by Money Show organizer Kim Githier. She did not reference its source.
You develop a serious concern that embeds several auxiliary issues. Perhaps the first step in addressing your issues is to verify the 52 % level and its source.
At least one source of that number is a recent Gallup poll. Here is a Link that I located from the Daily Finance site:
http://www.dailyfinance.com/on/stock-ownership-record-low-gallup/
Gallup’s summary conclusion was: “Just over half of Americans, 52%, now say they personally, or jointly with a spouse, own stock outright or as part of a mutual fund or self-directed retirement account.”
Here is the original survey data set directly from Gallup:
http://www.gallup.com/poll/162353/stock-ownership-stays-record-low.aspx?utm_source=alert&utm_medium=email&utm_campaign=syndication&utm_content=morelink&utm_term=All Gallup Headlines - Americas - Economy - USA
The trend as a function of time is particularly informative. Gallup also attempts a correlation and interpretation of the data set.
This might be a good place to start your own interpretation. The comments suggest that the data incorporates more than just individual stock ownership.
Best Wishes.
Since I subscribe to the inductive framework for investment decision making, I’m a dedicated proponent for collecting as much statistical data as possible.
Along those lines, I’m typically not satisfied with a single data source or reference. Just as in investing, a diversity of poll opinion usually uncovers salient factoids. The Gallup surveys may perhaps be quite accurate, but I would be more comfortable with another independent source for verification or trend conformational purposes.
The Investment Company Institute (ICI) provides this alternate source for mutual fund/ETF owners. The ICI publishes a very useful Fact Book annually. Here is the Link to the 2013 edition of that fine summary document:
http://icifactbook.org/
In particular, I direct your attention to Chapter 6: Characteristics of Mutual Fund Owners. It does not include individual stock ownership data. It is very comprehensive. Some of the data sets get deep down into the weeds, and, at least partially, address some of the issues that you identified about wealth distribution and demographics.
Enjoy.
Sorry for responding to your post in this piecemeal fashion.
Best Wishes.
The question asks about being currently invested in "the stock market ... either in an individual stock, a stock mutual fund, or in a self-directed 401(k) or IRA".
Here are some ambiguities that I think the vast majority of people would gloss over:
- 403(b), 457, etc. (similar to 401(k)s, but omitted from the question - this is likely the biggest source of ambiguity in the responses, and I suspect most people owning only 403(b)s would answer "yes".
The other ambiguities are more for amusement - most people who own any of the below likely also own "regular" stock or stock funds:
- private placements - still stock, but are they part of "the stock market"?
- REITs (and REIT funds) - ownership of a company, not a corporation, and fundamentally ownership of real estate, not a business. If this were all I owned, I don't know how I'd answer the question.
- GLD and the like - ownership of a fund that does not own stock (just raw metal), though most gold mutual funds own mining companies.
On the flip side, I suspect there are many people who own stock who should answer "no":
- co-ops - technically stock ownership, but intent (not wording) of question clearly excludes home ownership regardless of form
The bottom line is that the number means what the people answering the question think is means, and we'll never know exactly what this is.
Though it is clear enough to suggest that we've still got lots and lots of people relying on fixed income investments (if any) and social security for retirement. That is scary.
Here is a page of US Census links (2010 data) for information about household worth (regardless its form). And one particular link worth highlighting (as it in turn highlights key numbers):
Wealth and Asset Ownership - US Census page with links to spreadsheets and blogs
Changes in Household Net worth from 2005 to 2010
The median household net worth, excluding home, was $15,000. Since 52% of the Gallop responders said "yes", we know that at least some people with net worth under $15K are invested in the stock market, for the little that is worth.
I know what you're thinking - that this number is misleadingly low, because it includes young people just starting out. True. The median net worth excluding home of householders 65+ was $29K, vs. $4K for those 35-. No matter how you look at it, it is not a pretty picture. And no money available to invest in the market.
Hi Investor,
Indeed Bell shaped distributions are observed for mutual fund participants. The referenced ICI document in Chapter 6 shows these distributions for age and for income.
Best Wishes.