TINA refers to a commonly held belief today that investors should maximize their exposure to stocks given the lack of potential return in “safer” categories such as bonds and cash. Granular detail on stock ownership is difficult to find but here are a couple of tidbits. According to the Federal Reserve, 47.8% of Americans under age 35 had direct or indirect exposure to stocks in 2019 which is the highest level since 2001. Similarly, 51.5% of those in the 65-74 age bracket owned stocks, up from 30% in 1992. Finally, the average portfolio weighting in stocks for those over 75 was 55%, an all-time record. Given the strength in the stock market and generally bullish sentiment, it is likely that all of these figures are higher today.
Using Federal Reserve data, it is possible to calculate up-to-date estimates of the average equity weighting for all investors (including institutions) which is depicted in the following chart:
Note that stock exposure is at a 30 year high while bond and cash positions are at or near record lows.
I can imagine several different ways to evaluate these statistics. First, some might argue that equity weightings have historically been too low for most investors and the recent increases simply represent a shift toward a more appropriate level. A second point of view is that 0% returns on cash and the 1.5% yield on ten year U.S. Government bonds mean that there really is no alternative. Third, equities provide the best long term defense against inflation which is currently rearing its ugly head. Finally, we could be in a “risky asset” bubble created by highly stimulative monetary and fiscal policies. For whatever it is worth, my own view is that we should continue to enjoy the ride but with a keen eye toward the possibility of a financial mania.