Investor Equity Allocation

The Aggregate Investor Allocation to Equities (AIAE) estimates what share of all US investor portfolios sits in stocks rather than in debt, using Jesse Livermore's 2013 formula: the market value of US corporate equities divided by that value plus the debt of US households, nonfinancial businesses and governments. That debt ends up in investors' hands as bonds, loans or the cash that funds them, so the ratio approximates the stock weight of the aggregate portfolio. When investors already hold a lot of stock, there are few new buyers left and future returns have tended to be lower. The share bottomed near 22% in 1974 and 20% in 1982, fell to about 25% in early 2009, and peaked near 50% in 2000 and again in late 2021. The Q2 2026 reading of about 57% is the highest since the quarterly data starts in 1952. The rating ranks each month against only the months before it, with a higher share rated as higher risk; the first decade shares a single ranking because a shorter history is too thin to rank against. The bands are the 1952-to-date average, about 35%, plus or minus one and two standard deviations of about 8 points. Livermore found the share tracked the following 10 years of S&P 500 returns more closely than CAPE or the Buffett Indicator. Treat that with care: the fit was found on the same history it describes, overlapping 10-year windows leave only a handful of independent observations, and it badly underpredicted returns from 2013 to 2023, which ran well above what the readings implied. This card shows the share only, not a return forecast, and it does not feed the Market Valuation gauge. The data is the Federal Reserve's Z.1 Financial Accounts, published quarterly about ten weeks after each quarter ends: nonfinancial plus financial corporate equities, and the debt securities and loans of the domestic nonfinancial sectors. Financial-sector debt is left out because it mostly funds other lending already counted. Unlike Livermore, this version also leaves out the rest of the world's debt, so it reads slightly higher than his. Between releases the equity side moves with the daily S&P 500 and the debt side holds at its last print.