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    Stocks in household financial assets are at the highest level in 70 years

    Tourists are lined up to take a picture of the Charging Bull statue in New York’s financial district on August 16, 2021.

    Tayfun Coskun | Anadolu Agency | Getty Images

    Overall US household wealth has never been so high, thanks to the rise in the stock market, which holds a larger share of prosperity than ever before.

    In fact, according to Bank of America, equity holdings now account for about half of the $ 109.2 trillion financial assets held by households by the second quarter of 2021. Non-equity financial assets also include bonds, cash, certificates of deposit and bank deposits.

    According to Bank of America, asset equity shares are at their highest level in 70 years.

    Overall household net worth surged to $ 141.7 trillion in the second quarter. This is a result of the $ 3.5 trillion increase in the value of a company’s stock as stocks continued to rise during the period. According to the Federal Reserve, including nonprofits, the equity share of net assets is 41.5%.

    While this news was good for stock owners, there are always risk-taking concerns that raise concerns when market fortunes change. On Wall Street, the longest bull market in history ended in early 2020 and soon reopened, breaking records until the second half of 2021.

    Mitchell Goldberg, President of ClientFirst Strategy, said: “As the stock price keeps rising, they keep putting money in it. They will keep putting money in it until there is a better place to put it.”

    The S & P 500 rose more than 15% in 2021. Friendly fiscal and monetary policy And strong growth in corporate profits.

    An important part of the policy background was record low interest rates and aggressive funding from the Federal Reserve, in addition to large-scale fiscal stimulus from Congress.

    With the Federal Reserve Make the first noise about tightening And Washington politicians Fight for more spendingGoldberg wonders what happens when market-friendly policies begin to turn around.

    “People’s wealth goes up to two, stocks and housing, both more or less related to interest rates,” he said. “There were many policies that boosted the value of these assets. What if they were gone? That’s a $ 64 trillion issue.”

    The Federal Reserve Board has shown that they are likely to do so Start slowing down your monthly asset purchases By the end of the year. Still, interest rate hikes seem far away, and Philadelphia Federated Bank Governor Patrick Harker asserted on Friday that the central bank is unlikely to start hiking until late 2022 or early 2023.

    Michael Hartnett, chief investment strategist at Bank of America, said on Friday that clients “sold (moderately) shares in the last five weeks.” Bank sentiment indicators have become a bit more cautious from bullish enough to trigger a contrarian “sell” signal.

    Still, investors $ 34.5 billion in US Equity Trusts and ETFs According to Morningstar, the last 12 months alone show that the desire for stocks is still sufficient.

    Goldberg said he was cautious in such an environment and advised older clients to reduce their holdings somewhat and accumulate cash in more difficult environments.

    “Everyone invested today is investing in the same way on the basis of falling interest rates, globalization, a large supply-demand chain and low inflation,” he said. “These are huge macroeconomic cycles and now seem to be in the opposite situation. While experiencing these changes, it will create a lot of volatility, a lot of danger, and a lot of opportunities. . “

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    Stocks in household financial assets are at the highest level in 70 years

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    The post Stocks in household financial assets are at the highest level in 70 years appeared first on Eminetra.

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