By Elliott Wave International
Here’s a chart worth a minute of your time, especially if you have money in the stock market.
It comes from Elliott Wave International’s newly updated free report, The Most Dangerous Market in History? 18 Flashing Red Signals You Shouldn’t Ignore. Here’s what EWI’s analysts say about it:
“Investors are committing an extraordinary amount of their wealth to the market. The chart below shows that at the end of the first quarter of this year, households had 46% of their total financial assets in the stock market. The current extreme is 19% higher than it was at the top of the dot-com mania in 2000. Household wealth today is completely tied to whether the stock market rises or falls. At the Cycle wave IV low in 1974, households had 11.4% of their financial assets in stocks. At the end of Cycle wave IV in inflation-adjusted terms in 1982, the percentage committed to stocks was just 9.5%.”
Look at where the chart’s high and low points sit. Stock ownership was low near major market bottoms and high near major tops. Today’s reading is above them all.
This chart is one of 18 in the report. The others cover record valuations, margin debt, professional and advisor sentiment, market concentration, and even housing. Together they show how far optimism has stretched, and why EWI believes that matters right now.
