Home > Stocks > How much Stock is owned by Americans – Part 1?

How much Stock is owned by Americans – Part 1?

It was nice to know that the average person in the world had owned about $8,600 worth of stock.  We all know that there is no average person in the world.  The world’s wealth is spread very unevenly across the globe.  The average income in the wealthiest country (Luxemberg) is $37,500 versus the poorest country (Ethiopia) is $91.  The average for the whole world is $5,700.   The US is fifth on the list of countries with an average per capita income of a little over $33,000 a year.  Again, another surprise as I always assumed we had the highest per capita income.  So a quick rule of thumb could be that an average American owns (33,000 US average income/ 5700 World average income) X $8,600 World Average Stock Ownership = $49,800 of stock owned per US person by assuming that since our income is higher our stock ownership should be too.   Let’s say $50,000 per person in the US.

Let’s look for other measures.  One approach, though again rather crude, is to assume that only Americans own the stock in the NASDAQ and New York Stock Exchange (NYSE).  We know this isn’t true because obviously Foreign Investors own stock on these exchanges.  But, also keep in mind that Americans own stock in Foreign Markets, as well, so let’s say that Americans own as much stock in Foreign Markets as Foreign Investors own stock in our Domestic Markets (NASDAQ/NYSE).  The Market Cap for the NYSE & NASDAQ is about $17.7 trillion dollars.  There are 346 million US citizens.  Therefore, the average ownership would be 17.7 Trillion / 346 Million = $51,156 per person.  That is pretty close to the $50,000 we calculated previously.

With two rough rules of thumb in hand can we dig deeper into it?  While it would be nice to think that only Americans owned all the shares of the NYSE and NADAQ it obviously isn’t the case.  Also, Americans own shares in other stock exchanges around the world (i.e. the other 65%+ in the pie chart).  So, I went to the census statistics to see if I could find how much stock Americans owned.  I found this buried in their statistical database in table L.213.  This table showed what the American Ownership in Capital Equities (stocks) is.  This data helped sort out what the foreign investment in US stock markets was and what we owned in foreign markets.  It showed that US citizens owned $4.6 Trillion dollars of Foreign Equities and Foreign Investors owned $3.3 Trillion dollars in the US Domestic Markets (NYSE/NASDAQ).  So, this means that around 20% of the US Markets are owned by Foreign Investors, but, we own more of their stock than they own of ours.  So, it kind of put’s a different perspective on the alarmists you hear shouting about all these Foreign Investors buying America.  In any case now we could take the $17.7 Market Cap value and add the $1.3 Trillion difference (4.6 – 3.3) to get $19 Trillion and divide this by the 346 Million people to get $54,913 per person.

Now we have about $55,000 per US person.  But, in reality this is a little bit high because other entities own stock too in the US and this should be taken out of the equation too.  Companies like Insurance Companies, Commercial Banks, Savings Institutions, etc, invest to make money.  While these are often publicly traded companies and therefore owned by US people, we still should probably take out their value as they aren’t investing to make their shareholders money, but, instead to make money and spread risk.  The total of all these type of companies according to the detailed census data was about $1.4 Trillion dollars.  So, if we take this out of the mix, we are back to $17.6 Trillion dollars.  So, the $50,000 a year per person seems like a good number that has been somewhat validated by three independent ways of getting to a number.  Now that I have a good number in $50,000 per person, I will try to calculate this based on the average US family.  Usually only person in the family is actually trading stock for the family.

The average family size in the US is 3.19 people. There are 346 million people in the US.  That means there are 95.6 Million Families (346 / 3.19).  The average US Family would then have 50,000 X 3.19 = $159,500 worth of stock.  Let’s call it $160K per family.

The Median Family Income in the US is $65,000.  This means that the average family in the US should have 2 ½ times their salary invested in the stock market.  So, do most families have the families in the US have more than $160K in the stock market and have do not have at least $160K invested?  I doubt it.  We all know that money and wealth is not distributed evenly.  Even so, this does give me a little better feel for how much ownership of public companies there is in general in the US.  

The Average US Family has about $160K invested in the stock market.  In terms of who really owns this stock will be an investigation subject for my next blog.

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