Who Owns the Stock Market

  • September 4, 2020

What is the first image that comes to mind when asked who owns the stock market? Perhaps visions of men in suits, wearing Rolex's vacationing in the Hampton's, comes to mind?

But in reality, the majority of the stock market is owned by the average Joe. All in a roundabout sort of way.  

Who Owns the Stock Market?

  • For an exact breakdown of who owns the stock market, look no further than a white paper written by Steven Rosenthal and Lynda Austin. The employees of the Tax Policy Centre discovered the largest chunk of owners is doing one thing: helping people retire. Most corporate stock is owned by different types of retirement plans, the largest being IRAs and defined-benefit plans. These pension funds own two-thirds of the stock market (public markets) and invest the assets of the working people who make up the bottom 90%. 
Who Owns the Stock Market

1. Interesting to Know Facts

  • Traditionally, only the wealthy owned stocks.
  • Over the years, stock ownership increased through 401(k) type plans that made the market more accessible to many American households.
  •  Retirement accounts hold 37% of U.S stock.
  • Three-quarters of shares now are held in tax-exempt accounts such as IRAs or defined benefit/contribution plans, or by foreigners, nonprofits or others.
  • Taxable accounts hold only about one-quarter of U.S. corporate stock. 
  • Sadly only 51.9% of families own stock Federal Reserve's Survey of Consumer Finances (SCF).

In the surprising report published by Rosenthal and Austin, of the $22.8 trillion in stock outstanding, retirement accounts owned roughly 37%.

Sadly, the amount of stocks held by people outside of their retirement and nontaxable accounts has dropped off a cliff. For proof of who owns the stock market, look no further than the decline from over 80% in 1965 to about 25% in 2015.

who owns the stock market

2. Where Is the Stock Market Located?

Two of the world's largest exchanges - the New York Stock Exchange (NYSE) and the NASDAQ are both in the United States. Combined, they are both worth a staggering $21 trillion.

With over 2,400 companies listed, you can find the NYSE on Wall Street. Likewise, the Nasdaq with 3,800 companies is in Times Square. Even though each exchange matches buyers with sellers, they both do it differently. 

 The NYSE is a true auction house - matching the highest bid with the lowest price. For each stock, a market maker is serving as the in-between to ensure trades go smoothly.

Contrastingly at the Nasdaq, the buyers and sellers trade with a dealer electronically. Can you day trading on Robinhood and own the stock market? 

3. Electronic Communication Networks Make Owning the Stock Market Easy

Typically up until the 1990's, trading was primarily by institutional investors. However, in the 1990's, we had the introduction of Electronic communication networks or ECN's for short. E

CN's match prospective buyers and sellers without using a traditional stock exchange. Why is this important? 

First and foremost, they make the stock market accessible to retail traders like you and me. Secondly, we don't need to go into the pit.

In my opinion, ECNs leveled the playing field by allowing people like you and me to interact electronically. On the flip side, they enable large institutional investors anonymity in that they can hide their actions.

Building Wealth Through the Stock Market

  • "Wealthy people don't own stocks because they're wealthy; they're wealthy because they own stocks." If you don't believe me, just check out the Forbes annual list of billionaires. A quick look and you'll notice the majority made their fortunes through stock market appreciation. From to Warren Buffett with Berkshire Hathaway (NYSE: BRK-B) to Bill Gates with Microsoft (NYSE: MSFT) and Sergey Brin with Google (Nasdaq: GOOG), the wealth of these billionaires is from the stock market. 

1. A Shocking Statistic

I just read something that not only shocked but scared me. According to a Bankrate survey, only 23 percent of millennial's feel the stock market is the best place to put the money they won't need for at least ten years.

And why is this concerning, you may ask? Well, history shows that investing almost always pays off: Over the past 90 years, the average annual return for the S&P 500 is over 9 percent. So please, be smart and invest; don't be like the 77% of millennial's out there.

If you're looking for Parler stock price, check out Twitter, Facebook or Snap instead. Then you could be considered to own a piece of the market.

2. Who Owns the Stock Market and Can I Own It Easily?

If you're still not sure what to do, you can look into low-cost index funds, which Warren Buffet recommends. Think of an index fund as a basket of stocks with hundreds, if not thousands of different ones inside.

What's great is that they hold every stock in an index such as the S&P 500, including heavy hitters like Apple, Google and Microsoft. 

Index funds are one of the cheapest and easiest ways to diversify the money that you're investing. And when it comes to investing, "the trick is not to pick the right company," Buffet says. "The trick is to buy all the big companies through the S&P 500 and to do it consistently."

Investing in stocks through index funds are a passive form of investing because they don't require much trading. In the long run, this could save you a few bucks as you're not paying anyone to manage your portfolio actively. Especially if you know divergence trading.

1. One Index Fund I Like

Well we aren't here to offer you investing advice, but I do like   Vanguards Total Market Index fund (VTI). Ownership of this Index Fund gives you ownership of hundreds of companies, in a single large, stable, low-fee fund run by an honest company. 

Over time, this single investment could outperform over 90% of financial advisers and other funds. How great is that?

Final Thoughts

So to answer our question, "Who owns the stock market?". Well, the answer can be you if you start investing and buying stocks now. 

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