The Blubber

Per CNBC

The top 10% of Americans own almost all of the stock market at 89%, leaving the bottom 90% to own just about 11% of all US stocks.

A study by the Economic Policy Institute in 2020 found that to be in the top 10%, a person's average annual earnings should equal $173,000. This means the rest of the population earned less than this amount.

The top 1%, who earned an average annual salary of $343,000 in 2020, gained over $6.5 trillion in mutual fund wealth and corporate equities during the pandemic. The rest of the bottom 90% only added $1.2 trillion.

Urban-Brookings Tax Policy Center senior fellow Steven Rosenthal stated the inequality of holdings between the top 1% and the rest of the 99% of Americans.

Rosenthal: “The top 1% own a lot of stock, the rest of us own a little,”

The gap between the top 10-1% of individuals owning stocks happens despite a massive increase of people going into the stock market for the very first time. Stock exchanges like Robinhood now have 22 million users, with 10 million coming from the past two years alone.

This, however, is not necessarily a good sign since some first-time investors might have bought in at the wrong time and panic sold when stocks dropped. There were, however, multiple meme-stock events wherein even first-time traders became overnight millionaires by riding the incident.

Rosenthal: “Many of the younger investors also bought in at higher prices, compared to bigger investors who have been in the market for years and see larger gains,”

From January 2020 to June 2021, the top 10% saw their stocks jump by 43%. This, however, might not be the same today as big tech stocks have drastically fallen, with companies like Meta dropping by 66% this year. Rosenthal also gave a statement about new investors coming into the market.

Rosenthal: “They might account for a larger share of trading activity, but that’s different from ownership and wealth,”

Resources:

CNBC

Economic Policy Institute

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