U.S. Household Allocations to Common Stocks Is at Record Levels

Is This Reason For Concern?

The current record allocations among U.S. households to stocks is a concern. It is noteworthy that spikes in allocations to 30% or higher preceded significant market declines in the early 70s, the turn of the century, and 2008. All the previous peaks pale in comparison to the current level of over 40%.

The chart lends weight to our contention of the past few months that equity markets offer a poor risk/reward proposition to investors. We do not doubt that the market’s volatility we expect will produce opportunities for investors, but in the meantime, caution is warranted.

Our May issue discusses our strategy for protecting the profitability of our long positions and approach to navigating the market volatility we anticipate. And as usual, we update our views of major equity, bond, currency, and commodity markets.

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