continues through the second half of the
based on the growth of mutual fund
1990s," wrote Massachusetts Institute of
accounts and the stability in the numbers
Technology (MIT) economist James
of persons owning stocks directly. From
Poterba, "the number of individuals who
1995 to 1997, the number of individual
will own stock by the year 2000 will exceed
accounts in equity mutual funds rose from
80 million."8
70.7 million to 103.6 million--a 32.9 mil-
lion increase.1 2 The average mutual fund
Two innovations distinguish the stock
populism of the 1980s and 1990s from earli-
owner holds four accounts, so the 2-year
er and smaller waves of equity ownership: a
increase in individual accounts implies an
new means of entering capital markets (the
8.2 million increase in shareholders. Since
tax-advantaged defined-contribution plan),
54 percent of mutual fund shareholders
and a new way of reducing risk (the mutual
also own stocks directly, the numbers have
fund). From 1989 to 1995, the direct owner-
to be adjusted to avoid double-counting.
ship of individual stocks, primarily through
That yields 4.44 million more stockowners
brokerage accounts, increased a mere 1.5 per-
from 1995 to 1997--or, extrapolating for an
cent, from 27 million Americans to 27.4 mil-
added year, 6.66 million more over the
lion. But direct ownership of mutual funds
entire three years, 1995 to 1998.
From 1989 to
increased 149 percent, from 4.5 million to
If these calculations are correct, there are
1995, the Survey
11.2 million. And the numbers of Americans
currently some 76 million stockholders in
owning equity shares or stock mutual funds
the United States. That's 38.2 percent of the
of Consumer
through supplemental retirement accounts
resident adult population. This estimate
Finances reported
or defined contribution plans increased 48
closely approximates a January 1999
percent, from 20.8 million to 30.7 million.9
an increase in
Rasmussen Research survey of 6,400 people,
which measured stock ownership at 39.9 per-
"Two . . . trends may have accelerated the
median stock
cent.1 3 These figures on individual stock
growth of holdings of financial assets, partic-
holdings from
ularly stocks," explained the Federal Reserve
ownership imply that at least 43 percent of
Bulletin in January 1997. "First, the variety of
American households currently own equities,
$10,400 to
mutual funds available to families continued
up from 40.3 percent in 1995.
$14,500.
to expand, as did the number of no-load
funds. Second, employers increasingly
Depth of Stock Ownership
offered tax-deferred saving plans as a way for
workers to accumulate savings for retire-
ment. Often such employer-provided plans
Both mean and median portfolio sizes
offer an option that allows participants to
have continued to grow despite the massive
invest in corporate equities."1 0
influx of first-time investors. From 1989 to
1995, the Survey of Consumer Finances
The greatest inducement to invest in
reported an increase in median stock hold-
stocks was of course their yield. The average
ings from $10,400 to $14,500. New York
annual after-inflation rate of return from
Stock Exchange (NYSE) researcher James
1990 to 1997, based on the Standard &
Poor's index, was 13.1 percent.1 1 The Dow
Poterba of MIT calculated 1995 median port-
folio values at $15,500. He estimated mean
Jones Industrials rose from 2,508.9 in 1989 to
holdings at $88,800 in 1992, $95,000 in 1995.
5,117.1 in 1995. The Standard and Poor's 500
The mean and median sizes of investor
composite rose from 323.1 to 615.9. At the
portfolios vary predictably with age and
end of 1997, the indexes stood at 7,908.3 and
income. The NYSE reports that the 24.6 per-
970.4, respectively. And on March 29, 1999,
cent of stockholders below age 35 own 5 per-
the Dow Industrials crossed 10,000, finishing
cent of shares while the 14.1 percent of stock-
the day at 10,006.8.
holders over 64 own 30 percent. The 3.5 per-
How many stock owners are there now?
cent of shareowners earning under $15,000
It is possible to make an educated guess
4