Stocks are at a 70-year high as a share of household financial wealth

Because of gains in the stock markets, which have a larger share than ever of U.S. wealth overall, it has never been higher.

According to Bank of America, about half of $109.2 trillion in financial assets owned by households through the second quarter of 2021 is now made up of equity. Apart from stocks, financial assets can also be cash, bonds, certificates of deposit, and bank deposits.

Bank of America reported that the equity share of assets has reached a record 70 years.

The result of an $3.5 trillion increase of the corporate equity value as stocks continue their rise during this period, overall household net worth rose to $141.7 trillion. According to the Federal Reserve, 41.5% of net worth includes nonprofits.

The news is good news for stockholders, however there are still concerns about the possibility of the market changing. Wall Street witnessed the end of the longest bull market ever recorded in 2020. Then, the stock market quickly recovered and maintained its power through 2021.

Mitchell Goldberg of ClientFirst Strategy said, “Money moves where money grows.” They’re still investing money in stocks as the stock market continues to rise. They will continue to invest until they find a better spot to place it.

The S&P 500 has risen just over 15% in 2021, on the backs of friendly fiscal and monetary policySteady growth in company earnings.

The policy background has included record low interest rates, aggressive money pumping by the Federal Reserve and massive fiscal stimulus from Congress.

The Fed making the first noises about tighteningWashington and Washington politicians battling over more spendingGoldberg asks, “What will happen to market-friendly policies if they start turning around?”

He said that “people’s wealth is up on two things: stocks and homes, and both are more or less linked to interest rates.” These assets have seen a number of policy changes that have helped to increase their value. But what happens if the policies cease to exist? “That’s $64 trillion.

Fed officials indicate that they will likely do so begin reducing the pace of their monthly asset purchasesBy the end of this year. However, there are still some ways to go before interest rate increases. Philadelphia Fed President Patrick Harker said Friday that it is unlikely the central bank will begin raising rates until 2022, or 2023.

Michael Hartnett is the chief investment strategist at Bank of America. He noted on Friday that customers had sold stock (albeit modestly) over the last five weeks. This bank’s sentiment indicator has changed from being almost bullish enough for it to send a contrarian “sell” signal to becoming a little more cautious.

Still, there are many investors who have invested. $34.5 billion into U.S. equity mutual funds and ETFsMorningstar says that this is the case for all stocks in the last twelve months. This indicates there is still a lot of interest in stock markets.

Goldberg indicated that he was cautious in this type of environment. He advised his elderly clients to cut their cash and begin building wealth in an uncertain environment.

“Everyone is now investing in the same way, on the basis for falling interest rates, globalization and great supply-demand chain chains, as well as low inflation,” he stated. These are large macroeconomic cycles and we seem to be seeing the opposite now. It’s likely that these changes will create volatility, peril, and opportunity while we are going through them.”