The stock market has been on a major tear for the last four years, with both the Dow Jones Industrial Average and S&P 500 climbing to all-time highs:

[Federal Reserve Bank of St. Louis]

But the gains aren’t trickling down to the majority of Americans. As this chart from Gallup shows, stocks are owned by a record-low percentage of Americans today:


Gallup has suggested that low rates of stock ownership are related to high unemployment levels:


Obviously, unemployment is still a massive problem. But I think the shift away from stocks has been as much about the changing preferences of investors as it has been about sluggish growth in the labor market.

Historically speaking, stock indexes have been by far the best performing asset class, easily outperforming bonds, cash, gold, and real estate. As Warren Buffett has argued, this makes sense in the long run, since stocks are shares in companies that produce a return. In other words, they are a productive asset.

But the last 15 years have been an extremely turbulent period. After the technology bubble at the turn of the century, real estate became the most popular investment in the mid-2000s. But unlike stocks, real estate is not a productive asset. It’s a deteriorating asset that requires spending for upkeep, and when prices rise, more supply is usually built. This makes real estate vulnerable to severe price corrections as occurred in 2008, which clear out the speculators.

After the real estate boom and bust, people began to look around for other investment options. In a 2011 poll, Gallup found that the most popular investment had become gold. But gold isn’t a productive asset either. And the gold boom didn’t work out very well, with gold prices currently down over 30 percent from their 2011 highs.

Sooner or later, more Americans will rediscover stocks. But it’s a shame — given the high current levels of inequality — that more people haven’t been able to benefit from the price rises of the last four years.