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To: Cynic 2005 who wrote (25308)	3/15/1999 10:23:00 AM
From: John Pitera	Respond to of 86076

U.S. Stock Holdings Rose 20% in 1998, Highest Percent of Assets in Postwar Era March 15, 1999 By DAVID WESSEL Staff Reporter of THE WALL STREET JOURNAL WASHINGTON-The value of U.S. households' stock portfolios rose 20% to $10.77 trillion last year and now represents 25% of total household assets, higher than at any time in the post-World War II era, according to new Federal Reserve Board data. Equities represented a growing portion of U.S. household wealth in the 1950s and 1960s, reaching a peak of 23.7% in 1968. But that trend reversed during the bear market years of the 1970s, both because of the declining value of Americans' portfolios and because many people lost interest in the market. In 1984, only 8% of Americans' wealth was in stocks. But the soaring stock market of the 1990s and the expansion of retirement plans that allow workers to direct investments into the market has changed the trend again. Just 10 years ago, only 10.4% of Americans' wealth was in the market. The percentage has grown steadily since then. The growing wealth of U.S. households has been one factor fueling consumer spending, contributing to the continued growth of the U.S. economy amid global economic turmoil. But the increasing importance of equities in consumer balance sheets also means they are more vulnerable to a drop in the stock market, should it occur. The Fed's latest quarterly "flow of funds" report says that the value of Americans' real estate assets -- $9.22 trillion at year-end-also has risen, but not nearly as much as the value of the stock portfolios. In the last decade, the value of U.S. households' real estate has increased 55%; the value of their stocks has increased 381%. The figures aren't adjusted for inflation. Consumer prices rose by 38% over the decade. Consumer borrowing has increased, too, but not as rapidly as asset values. The Fed data show that the collective net worth of U.S. households continued to climb last year, reaching $36.79 trillion at year end, up 10.2% over 1997. Of that, $5.11 trillion is home equity. On average, Americans have mortgages that represent about 45% of the value of their homes, up from about 35% a decade ago. The Fed report sheds no new light on how wealth is divided among U.S. families. A 1995 Fed survey, now being updated, found that 68% of the stock-market wealth owned by households was held by the richest 5% of the population. "If patterns of equity ownership have not changed much since 1995, the steep rise in stock prices over the past several years would suggest a further increase in the concentration of net worth," Fed Chairman Alan Greenspan said in a speech last summer. Extrapolations by economist Edward Wolff, done by the Economic Policy Institute, a liberal Washington think tank, suggest that more than 40% of the gains created by the bull market of the 1990s have been claimed by the wealthiest 1% of the population and that more than 85% of the gains have gone to the top 10%. As of 1995, only 40.3% of households owned any stock, according to the Fed. The percentage probably has risen since then. The Fed's flow-of-funds data lump household wealth with holdings of nonprofit organizations, but the assets of nonprofits represent less than 3% of the combined total assets of $43.04 trillion. In measuring household ownership of equities, the Fed includes individual stock, mutual funds and equities held in employee-directed retirement plans; it doesn't include stock held for workers' benefit in defined-benefit pension plans. Of the $10.77 trillion the Americans hold in equities, the Fed says $6.28 trillion is in individual stocks and $1.73 trillion is in mutual funds; the rest is in bank trust funds and estates, life insurance companies and retirement plans.