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Households are Loaded to the Gills with Stocks

By John Del Vecchio and Brad Lamensdorf

Household ownership of stocks has hit a new high. One might think this is a good thing as Americans have increasingly invested in the market to save and build wealth.

It turns out to be a contrary indicator. Especially at new peaks.

The chart below, courtesy of SentimenTrader, shows that household equities as a percent of total financial assets just hit 36.5%. That exceeds the previous high set around the Internet Bubble of 32.5% in 2000 and the 29.7% mark during the growth stock boom of the late 1960’s.

Households are Loaded to the Gills with Stocks

The prior two peaks saw 10-year annualized returns in negative territory for the S&P 500.

Meanwhile, periods such as 1975 and 1982 where households dumped stocks were met with massive forward gains. Even 2009, which dropped household equities below 20% created a generational buying opportunity.

We are far from those periods. The current situation calls for caution and we continue to believe the stock-picking and alternative strategies will out-perform plain vanilla indexing in a big way over the next cycle.

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

You may book a call here.

DISCLOSURE: LAMENSDORF MARKET TIMING REPORT

Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.

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