Katusa Research · Market Sentiment
US Household Equity Allocation: 80 Years of Fed Data
The share of household financial assets sitting in stocks. Quiet, quarterly, and one of the strongest long-run return predictors on record.
US households hold 45.8% of their financial assets in equities as of Q1 2026. The all-time record is 46.7%, set one quarter earlier. At the 1982 generational bottom, the number was 9.5%.
| Reading | Value | When |
|---|---|---|
| Current | 45.8% | Q1 2026 |
| Record high | 46.7% | Q4 2025 |
| Record low | 9.5% | Q2 1982 |
| Average since 1945 | 24.5% | 80 years |
The Gauge
Why Allocation Predicts Returns
The logic is supply and demand, not valuation. When households already have a record share of their wealth in stocks, the marginal buyer is scarce. Future demand has been pulled forward. When allocations are low, as in 1982, there’s a generation of buying still to come.
An anonymous blogger at Philosophical Economics made this famous in 2013, showing the metric out-predicted CAPE, the Buffett Indicator and every popular valuation tool for ten-year returns. The nickname stuck: the single greatest predictor of future stock market returns.
Context
Extremes Mark the Turns
Allocation bottomed at 9.5% in 1982. An 18-year bull market followed. It peaked near 38% in early 2000, ahead of a lost decade. Today’s 45.8% is above the 2000 peak by a wide margin, and the record was set last quarter.
Reading the Gauge
What High or Low Allocation Means
This gauge works on supply and demand rather than valuation. A low allocation means households are out of the market, so there’s a reservoir of future buying that can push prices up for years. A high allocation means the buying already happened. When nearly half of household wealth is in stocks, the marginal buyer is scarce, and history says the following decade disappoints.
| Range | What it means |
|---|---|
| Under 20% | Washed out. The 1982 low of 9.5% kicked off an 18-year bull market. |
| 20% to 30% | Below average. Long-run mean is 24.5%. |
| 30% to 38% | Elevated. The 2000 peak sat near the top of this band. |
| Over 38% ← TODAY | Record territory. Every reading here is above the dot-com peak. Today: 45.8%. |
FAQ
Frequently Asked Questions
What is the household equity allocation right now?
45.8% of household financial assets as of Q1 2026, just off the record 46.7%.
Why is this called the greatest predictor of future returns?
In backtests since 1945, the starting allocation explains future ten-year S&P 500 returns better than CAPE, the Buffett Indicator or interest-rate models. High starting allocations have consistently led to weak decades.
Where does the data come from?
The Federal Reserve’s Z.1 Financial Accounts (FRED series BOGZ1FL153064486Q), quarterly since 1945.
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This page is for information only. It is not investment advice, an offer, or a solicitation to buy any security. Data comes from public sources and can contain errors or delays. Do your own research before you invest.
