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September 05, 2007

Who's We, Kemosabe?

This isn't the most shocking data in the world, but in this period of stock market hysteria, it's worth remembering that the majority of the country doesn't own any stock. Indeed, the bottom 90 percent of us only own 20 percent of the market. The top 10 percent, by contrast, control 80 percent, with the top one percent of Americans controlling an astounding 36.9%. What's that you say? You want to see this represented graphically?

Stock Market

See those tiny slivers of checkered pink, blue, grey, and red? That's where most of the country is.

September 5, 2007 in Charts | Permalink


You need to stop your elitist concentration on facts and numbers. The truth is that the people at the top of ownership and wealth are the geese who lay golden eggs, and that is true without even having to look at any facts or make any arguments.

In fact, our ultra-wealthy are so productive for the U.S. American economy that they can sustain themselves on a metaphor-basis alone, including lifting all boats with a rising tide, trickling wealth down to everyone, and priming the pumps of national energies.

Posted by: El Cid | Sep 5, 2007 9:21:06 AM

Without going into detail, it appears the chart is somewhat misleading since I assume it leaves out institutional investors, who own I believe most stock these days (although I could be wrong about that). The largest stock holder is CALPERS, most state pension funds are also heavily invested, as are our friendly union funds. Plug those funds into the mix and those who benefit from them and you will get a far different chart. But about par for the course on EPI--bringing you half the story since 1999!

Posted by: Scott | Sep 5, 2007 9:28:32 AM

it appears the chart is somewhat misleading since I assume it leaves out institutional investors

It appears that your assumption is not correct. If you had bothered to follow the link Ezra provided, you would have seen the following note under the graph Ezra posted:

1. Stock ownership may be direct (owning shares in a particular company) or indirect (owning shares through a mutual fund or a retirement account).

Posted by: Herschel | Sep 5, 2007 9:42:11 AM

Still, Herschel, it makes sense to separate direct and indirect investment - the point is that the market, as it always has, is more in the hands of institutional investors and large business concerns than any individual. Which is why small individual investors could be seriously burned if the down turn goes much deeper than it has up to now... something I remain fairly convinced of. As well, I'm not sure what the point of Ezra's post is - this isn't really unknown information; and the question isn't whether a bad stock market will have an impact on people because of personal stock ownership, but because of the ripple effect such investments have on businesses and their ability to make decisions about expanding business or making additional investments. The fact that most people have no direct involvement in stocks doesn't just mean they have no control, it also means that they can be severely impacted by decisions that are made at corporate level.

Posted by: weboy | Sep 5, 2007 9:48:39 AM

Should not this data be plotted (tabulated) per household rather than individuals? My family owns stock, but on an individual basis only 1 in 7 of us actually owns the stock.

Posted by: George | Sep 5, 2007 10:18:20 AM

I don't think it's entirely coincidental that economics was one of the few academic specialties to avoid concerted and conformist attack by the right wing for the last 30 years.

Posted by: El Cid | Sep 5, 2007 10:31:29 AM

Herschel, you're just wrong. If I own a stock through MY individual retirement account it is different than if an institution such as CALPERS or Harvard or a union owns or other pension fund owns it. If so, how do you count Harvard in our chart there? Is it a top 1% of households? Top 10%?

Posted by: Scott | Sep 5, 2007 10:33:27 AM

So......rich people own more stock than poor people.

Wow! Is there going to be film @ 11:00?

Posted by: El Viajero | Sep 5, 2007 10:40:50 AM

Viajero, the point is that people who go on TV and talk about how totally awesome the economy is because the stock market is doing well is really only speaking for a small sliver of the population. Yea, we already knew this, but more and more it seems we as a nation just don't give a shit about you if you are not in the top 20%, and this is more proof.

Posted by: Joshua | Sep 5, 2007 10:47:31 AM

Scott, perhaps I misunderstood what you were saying. When you mentioned institutional investors within this context, I thought you were talking about institutions like TIAA-CREF and Fidelity, with huge holdings representing 401(k) and 403(b) plans, through which many people indirectly own stock. (CalPERS is represented in this area as well.) This class of ownership is included in the EPI numbers, which address stock ownership by households. Since Harvard isn't a household, I assume the portion of its endowment portfolio invested in stocks is not included here. Why would it be?

Posted by: Herschel | Sep 5, 2007 11:11:18 AM

Come now, Ezra. A weak stock market is of concern to a lot of middle class people with pension plans that invest in it, like my own CalPERS.

Oh, never mind. What those smarter dudes up above said.

Posted by: James F. Elliott | Sep 5, 2007 11:31:21 AM

The graph shows something interesting, but not that stocks are unimportant to most Americans. To do that, you would have to plot the ratio of value of stocks owned to net worth, or something like that. The performance of the stock market is much less important to a billionaire who owns a million dollars of stock than to a lower-middle-class striver who owns $50K. (But I have no idea what such a graph would actually look like.)

Posted by: Sean Carroll | Sep 5, 2007 12:48:41 PM

I agree with the premise that the stock market is overstated as a measure of economic health and there is a strange triumphalism in the media when it does well -- like we all won the big game.

Unfortunately, (I guess), people who have their retirement coming to them from traditional defined benefit pension plans, like CALPERS, are very much dependent on the market doing well over the next decade or two, as pension plans attempt to rebound from the debacle in the markets of 2000-2002. The long term funding of these plans requires the markets to perform at close to historical norms over the long haul in order to meet their obligations.

Posted by: Klein's Tiny Left Nut | Sep 5, 2007 12:56:53 PM

Weboy, it's important because so many conservative pundits, like Neil Cavuto for one, like to say the economy now is the best it's ever been, and everyone should be happy. When they are confronted with the fact that wages have stagnated over the past decade, they brush it off and say, 'don't worry about that, the stock market is up, and more and more people are investing there'. It's good to point out that that's not really a significant factor for the vast majority of the population.

Posted by: mad6798j | Sep 5, 2007 1:23:06 PM


The other point the Cavutos (read idiots) of the world never point out is that the Dow and the S&P are more or less where they were 7 and 1/2 years ago, meaning in real terms they are at least 20-25% lower.

The NASDAQ in absolute terms is 50% lower than its high.

So there is not a lot to brag about here either.

Posted by: Klein's Tiny Left Nut | Sep 5, 2007 1:54:49 PM

Anybody have enough data to graph a distribution of number of households vs. household net worth? I'd expect it to be a power law distribution. Furthermore, I'd expect the exponent to be constant over time. If not, then that would be evidence of something other than a naturally evolving complex system.

You'd obviously need pretty fined-grained data. Quintiles ain't gonna cut it.

Posted by: TheRadicalModerate | Sep 5, 2007 11:52:23 PM

Well, that's a lot of chinese. (in the comment above, in case E deletes it)

The graph would appear to include direct savings, but not pension plan savings. That, of course, would give a broader picture of stock ownership.

Furthermore, the fact that the SP *index* isn't that far above it's 2000 peak does NOT imply that returns have been meager. There was a consistent dividend return all this time. Stocks have handsomely exceeded inflation for this entire time.

I'm not familiar with 'Cavuto', but that's a strawman of a counter-argument. A good stock market often means a lower cost of capital for businesses, which usually means job formation,low unemployment and (sorry inequality mavens) strong real income growth. Which we thankfully have had in spades since the market firmed up.

Posted by: "Mindles H. Dreck" | Oct 30, 2007 6:12:55 AM

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