Richest 10% of Americans own a record 89% of all US stocks – .

Richest 10% of Americans own a record 89% of all US stocks – .

The richest 10% of Americans now own 89% of all US stocks, a record that highlights the role of the stock market in increasing wealth inequality.
The richest 1% earned more than $ 6.5 trillion in company shares and mutual funds during the Covid-19 pandemic, while the poorest 90% added $ 1.2 trillion, according to the latest data from the Federal Reserve. The share of shares of companies and mutual funds held by the richest 10% hit an all-time high in the second quarter, while the poorest 90% of Americans held about 11% of stocks, up from 12% before the pandemic.

The stock market, which has nearly doubled since the March 2020 decline and is up nearly 40% since January 2020, has been the main source of wealth creation in America during the pandemic – as well as the main driver of inequality. The total wealth of the richest 1% now exceeds 32%, a record high, according to Fed data. Almost 70% of their wealth gains over the past year and a half – one of the fastest growing wealth booms in recent history – came from stocks.

“The richest 1% own a lot of stocks, the rest of us own a little,” said Steven Rosenthal, senior researcher, Urban-Brookings Tax Policy Center.

The growing concentration of wealth comes despite millions of new investors going public for the first time during the pandemic, leading to what many have called the “democratization” of stocks. Robinhood has added over 10 million new accounts over the past two years and now has over 22 million, many of which are held by young, novice investors.

Yet while the market may be owned more broadly, the gains and wealth it creates are not more widely distributed. Rosenthal said that while the army of new investors may be large, it is also still small, with the average account size at Robinhood being around $ 4,500. When the markets rise, their dollar gains will be much smaller than those of richer investors with hundreds of thousands or even millions of stocks.

“A lot of the younger investors have also bought at higher prices, compared to the bigger investors who have been in the market for years and are seeing bigger gains,” Rosenthal said.

Additionally, many of the new investors have more of a trading mindset – buying and selling stocks quickly, with leverage, with the expectation of quick gains. While the strategy can create big winners, others may see lower returns than investors who simply buy and hold for the long term.

The richest 10% saw the value of their shares rise 43% between January 2020 and June 2021, according to the Fed. The bottom 90% saw stock wealth increase at a lower rate – 33%.

“They might be a bigger part of business activity, but that’s different from ownership and wealth,” Rosenthal said.


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