US Households To Withdraw $430 Billion From Stocks In 2014 - Most Since Last Bubble

Tyler Durden's picture


When it comes to the conventional wisdom of who owns the bulk of corporate stock in the US equity market, the consensus is simple: at 36% of total, the answer is the US household. This is shown in the chart below.

As an aside we disagree from this simplistic analysis because as is well known, the "Household" category, which is pulled from the Fed's quarterly Flow of Funds report, is merely a placeholder plug, designed to balance out all the other member categories. What is less known is that entities such as hedge funds use extensive "off the books" leverage (just ask Citadel and its nearly 9x regulatory leverage) to hold far more equities than their capital allows them. Which means that in reality the US household owns far less stock than is believed.

But even if one takes the Fed's data at face value, what becomes clear is that having owned virtually the entire stock market in 1945, households are now down to nearly their lowest fractional ownership in history, with the rest alloted to mutual, pension and retirement funds.

And it is only going to get worse.

According to a recent analysis by Goldman, in 2014 the US household is on track to withdraw a whopping $430 billion from US corporate stocks. i.e., sell. This will be the biggest net outflow by the Household group, which has constantly withdrawn cash from equities over the past decade, since the last market peak.

It is understandable why: with baby boomers retiring in droves, and with interest income non-existent, investors are forced to liquidate positions in order to generate, well, liquidity.

Perhaps a more disturbing question is why is the household outflow not bigger? After all it surpassed $1 trillion during the last market peak. Could it be because households just don't have all that much equity left in a market which is now dominated by a mere tiny fraction of the entire US population?

But the biggest question is with household pulling cash out, who will provide the offsetting inflow into stocks? The answer: corporations of course - the same entity that injected a record $500 billion in stocks in the form of buybacks is set for another bumper year of net inflows, and according to Goldman companies are on par to match their 2013 buyback activity by buying back some $450 billion of their own stock in the coming year.

This also expains why for one more year, there will be no capex rise - quite simply in order to maintain the illusion of the stock market ponzi, corporations have to keep buying back ever greater amounts of their own stock in order to keep reducing the denominator in the EPS fraction and perpetuate the myth that Net Income is growing when in reality only the number of outsanding shares is declining. So for all those hoping for that so long overdue CapEx bounce, may we interest you in some 1000+ forward PE multiple stocks.

After all in a ponzi which has already likely passed its Minsky moment, the only "trade" that works is to bet on the greatest fool of all, the Fed.

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Wed, 04/09/2014 - 19:04 | 4641191 FieldingMellish
FieldingMellish's picture

Gotta pay for the FSA somehow.

Wed, 04/09/2014 - 19:16 | 4641209 Major Major Major
Major Major Major's picture

Hopefully Stocking up on Ammo

Wed, 04/09/2014 - 19:17 | 4641211 Arius
Arius's picture


buy when there is blood on the street!

Wed, 04/09/2014 - 19:22 | 4641222 zaphod
zaphod's picture

The big take away for me from that outflows chart, is that it says households have had only outflows for the past 10 years and never any inflows. 

So where is all this money coming from???

Wed, 04/09/2014 - 19:28 | 4641236 kliguy38
kliguy38's picture

hmmmmmmm....i can't imagine...hehehhhehe

Wed, 04/09/2014 - 19:32 | 4641254 Son of Loki
Son of Loki's picture

Free Corzine !

Wed, 04/09/2014 - 20:41 | 4641494 Soul Glow
Soul Glow's picture

Free Bernanke!

Wed, 04/09/2014 - 21:57 | 4641760 yogibear
yogibear's picture

He thinks he  will be forgotten for the mess he created,

Wed, 04/09/2014 - 22:16 | 4641816 Groundhog Day
Groundhog Day's picture

Does anyone believe a sociopath like Bernank gives a flying fuck about who blames him for what.  He probably has billions stashed away in lichtenstein or better yet, pleanty of gold buried somewhere with treasure map where X marks the know tradition

Thu, 04/10/2014 - 01:32 | 4642237 0z
0z's picture

Does 'Households' mean 'real people', in their name, without shame and fraudulent concept of a Corpus which has no organic body. capacity of action and responsability?
That would mean most of the Stock market is held by Fraudsters! 

Wed, 04/09/2014 - 21:08 | 4641592 villainvomit
villainvomit's picture

My best guess is trying to just get by one more day.  They already have ample ammo and it is well known.  That's why it won't come for another generation.  The War of Govt Aggression.....that's what it will be called in the South.

Never go wrong buying more ammo, Captain!

Wed, 04/09/2014 - 21:10 | 4641596 villainvomit
villainvomit's picture

I meant Major.....sorry !!! 

Wed, 04/09/2014 - 22:31 | 4641858 snodgrass
snodgrass's picture

Need the money to shop at WalMart.

Wed, 04/09/2014 - 19:05 | 4641192 FieldingMellish
FieldingMellish's picture


Wed, 04/09/2014 - 19:11 | 4641201 QQQBall
QQQBall's picture

Net after taxes and inflation?

Wed, 04/09/2014 - 19:16 | 4641205 813kml
813kml's picture

About tree fiddy.

Wed, 04/09/2014 - 20:42 | 4641498 Soul Glow
Soul Glow's picture

Freedom costs a buck 'o nine.

Wed, 04/09/2014 - 19:17 | 4641213 I Write Code
I Write Code's picture

But the biggest question is with household pulling cash out, who will provide the offsetting inflow into stocks? The answer:

Da Fed.

Actually, it's not unreasonable for anyone to cash out now, at least there are some long-term capital gains to be had, and many may have long-term capital losses to balance.  Good time to get into gold.

Or bitcoin LOL.

And on the other other hand, why should anyone believe Goldman about anything?

Wed, 04/09/2014 - 19:18 | 4641214 Smegley Wanxalot
Smegley Wanxalot's picture

No issue.  The fed will pump about a $ trillion in, so the net will be a $570 billion boon to the bankers.

Wed, 04/09/2014 - 20:43 | 4641507 Soul Glow
Soul Glow's picture

Diminishing returns be damned!

Wed, 04/09/2014 - 19:27 | 4641220 Pee Wee
Pee Wee's picture

Smegley beat me to it.


Wed, 04/09/2014 - 19:31 | 4641248 scubapro
scubapro's picture

there is something missing with this chart.  its common knowledge that in 2013 there were net inflow to equity mutual funds, and outflows 08-12.  outflows in 2007??    something is not right.

Wed, 04/09/2014 - 19:46 | 4641307 Bunga Bunga
Bunga Bunga's picture

Who they gonna sell to? Yellen?

Wed, 04/09/2014 - 19:52 | 4641333 drinkin koolaid
drinkin koolaid's picture

I thought that the fabulous newsletter writer Dennis Fartman was the greatest fool.

Wed, 04/09/2014 - 20:03 | 4641364 new game
new game's picture

lumping that loser with krugman. corzine ect.

Wed, 04/09/2014 - 19:58 | 4641346 ArmyofOne
ArmyofOne's picture

The central planners still have over $650 billion to print.


Next topic.

Thu, 04/10/2014 - 03:13 | 4642295 ebworthen
ebworthen's picture

Still $55 Billion per month, and ZIRP still in effect punishing savers.

Almost as if they were punishing responsible individuals while rewarding skullduggery on Wall Street.  Must be a conicidence as that would be the opposite of their "mandate".

Wed, 04/09/2014 - 20:01 | 4641356 new game
new game's picture

are ceo's household share cropers too? if so that would make the ma and pop amt sig less.

Wed, 04/09/2014 - 20:40 | 4641488 Soul Glow
Soul Glow's picture

Boomers gotta retire!

Wed, 04/09/2014 - 21:41 | 4641686 Georgia_Boy
Georgia_Boy's picture

Which category does, say, Bill's shares in Microsoft fall into? On the face of it, I'd say households.  So how about this for an alternate explanation ... insiders are selling.  And they sold big in 2007, sensing things were going to get rough, and held in 2009, knowing things would probably return.

On the face of it, it doesn't look like we're going over the cliff just yet. I've probably got more time to prepare. It's going well so far, I'm about to finish off the last of my recourse debt this month and then it's time to fix the house and get the mortgage down a little more so I'm ready in case I should have to sell it and move. First mover advantage. Adding to the cash and PMs will have to wait a few more months.

Wed, 04/09/2014 - 22:13 | 4641809 Midnight Rider
Midnight Rider's picture

To buy $450 billion of their own stock at all time highs. That's one big waste of money.

Wed, 04/09/2014 - 22:38 | 4641880 Yen Cross
Yen Cross's picture

   Meh (6) months of QE...Time to buy some moar cheap Chinese trinkets after that exports number.

Thu, 04/10/2014 - 00:18 | 4642144 game theory
game theory's picture

Net inflow never went negative over the last eight years? And households have been bailing for every year since 2006?


Thu, 04/10/2014 - 00:24 | 4642159 naughtius maximus
naughtius maximus's picture

WHAT?? This is not supposed to be happening.. I can't say this is bullish.. not like I say on every single thread in the last 3 weeks...

Thu, 04/10/2014 - 03:10 | 4642294 ebworthen
ebworthen's picture

I took out $3,000 yesterday to help pay the bills, I.R.S. got $300 for Ukraine.

The only good part was I was taking it out of the casino.

Thu, 04/10/2014 - 06:50 | 4642443 A_Nejad
A_Nejad's picture

Watch out for that inflation coming at you next quarter..

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