There is a bearish chart which shows stocks as a percentage of financial assets is the highest since the tech bubble. However, this masks the switch from non corporate investments to equity and mutual fund holdings which is likely a secular change.

There has been a decline in sole proprietorships, partnerships, and overall business creation in America as the economy has become less dynamic. I wouldn’t say the high valuations are justified by the decline in small business and rise of big businesses, but they certainly are explained.

Another catalyst besides the weakness in business creation is the invention of 401K funds. The law which made retirement investing tax free was passed in 1978. Since these 401K plans were technically a loophole in the tax law, it took until the 1980s for them to be popularized. America has gone through a financial revolution in the past 50 years. First retirement accounts promoted more investing for retirement and then ETFs allowed everyone to get access to the whole market for a low fee.

Are Financial Assets Over-Owned By Households?

Submitted June 22, 2018 at 11:11PM by AlexPitti https://ift.tt/2Khk3cv