US and Canadian investors now hold approximately 60% of their financial assets in stocks. This near-record concentration makes household and institutional balance sheets highly vulnerable to any decline in stock prices.
The reading, referred to in Al Qubaisi’s message, is above the levels recorded before previous bear markets. It also far exceeds the wealth that investors in Europe and Japan associate with stocks.
Standard bias towards stocks
Al Qubaisi’s message contradicts Regional spread in last post. Scandinavian investors hold about 50% of assets in stocks, while European investors hold about 31%.
Japan’s allocation is about 20%, roughly a third of the US and Canadian levels. This gap shows how heavily US and Canadian portfolios depend on stock performance.
“This exceeds the peaks seen before the bear markets of 2000, 2007 and 2021,” analysts said.
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AI stocks carry upside and risk
The record allocations come at a time when US stocks continue to achieve notable gains. However, the height depends on a Narrow base.
Since late February, the S&P 500 has risen 8.03%, according to Jim Bianco, president and macro strategist at Bianco Research. The same index without the AI names rose only 1.04%.
At last week’s peak, AI stocks made up 49% of the S&P 500. Bianco called it the biggest concentration on a single topic in more than a century.
“This is the most single-theme focused stock market since railroad stocks in the late 19th century.” He said.
The split emerged in early June. When the S&P 500 fell about 4.5% between June 2 and June 10, the non-AI 500 rose, according to Bianco.
This divides matters for households and other investors. Their standard exposure is mostly in a few AI companies. A decline in these names would lead to a deeper decline than the leading indicator suggests.
The focus is set on growth. SpaceX listed this monthWith Anthropy and OpenAI is expected to follow, adding More AI weight once public.
As gains pile up on AI, stumbling into these names would test the breadth of the rally. In the event of a correction, standard exposure leaves investors with more wealth at stake
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this post US investors’ equity exposure is at the highest levels seen before past bear markets appeared first on BeInCrypto.
