Are Investors Losing Interest?
With the U.S. markets hitting record highs, one would assume more adults would be participating in the stock market when compared to previous years. Since the last financial crisis, we have not experienced an increase of stock market participation. The equity markets continue to march forward and the participation in these gains has not. Per research published by Gallup, a little more than 52% of Americans’ currently have money invested in the stock market. As you can see in the below graph, this matches the lowest ownership rate since 1999. During the high in 2007, nearly 2 out of 3 adults had money invested in the stock market. Did big losses experienced in 2008-09 change Americans’ sense of confidence in the stock market?
Since hitting the bottom in 2009, we have seen great gains made in the stock markets. Yet we have not seen an equally impressive recovery in stock market participation. While investors in the stock market have been rewarded with stellar returns, fewer investors are benefiting from the recent gains. Are Americans’ views of the stock market changing? When looking at the current participation numbers, I would say yes. This change in thinking could keep portfolio values lower and possibly extend retirement dates.
A pull back in the stock market is long overdue and should not come as surprise to investors. Valuations cannot continue to trend upwards into perpetuity. It is something you need to plan for and be ready to take advantage of. When others are selling and fearful, prices are cheap and you should be buying. The cornerstone to a strong financial plan is owning a diversified portfolio. This entails owning multiple asset classes in amounts that put the odds of success in your favor.