US Households To Withdraw $430 Billion From Stocks In 2014 – Most Since Last Bubble

When it comes to the conventional wisdom of who owns the bulk of corporate stock in the US equity market, the consensus is simple: at 36% of total, the answer is the US household. This is shown in the chart below.

As an aside we disagree from this simplistic analysis because as is well known, the “Household” category, which is pulled from the Fed’s quarterly Flow of Funds report, is merely a placeholder plug, designed to balance out all the other member categories. What is less known is that entities such as hedge funds use extensive “off the books” leverage (just ask Citadel and its nearly 9x regulatory leverage) to hold far more equities than their capital allows them. Which means that in reality the US household owns far less stock than is believed.
But even if one takes the Fed’s data at face value, what becomes clear is that having owned virtually the entire stock market in 1945, households are now down to nearly their lowest fractional ownership in history, with the rest alloted to mutual, pension and retirement funds.
And it is only going to get worse.
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