Americans have never had more of their money in stocks — not even in the dot-com bubble: Chart of the Day

Your parents' nest egg was mostly bonds and savings accounts. Yours is mostly stocks.

Stocks made up 48.2% of Americans' financial assets in the second quarter, counting everything from brokerage accounts to 401(k)s, according to the Federal Reserve's latest Financial Accounts data. That's the highest share in records going back to 1945. It tops the 38.7% reached at the height of the dot-com mania and the 41% hit after the 2021 meme-stock frenzy.

The cash pile looks small by comparison. Households hold about $74 trillion in stocks against roughly $20 trillion in bank deposits and money market funds — a record $3.65 in stocks for every dollar of cash.

So much for all that money waiting on the sidelines.

There's some fine print. The Fed's household category is a catch-all that also includes nonprofits, and the central bank says its estimates for the group are "largely residual, derived from other sectors' data."

The ownership is lopsided, too. The richest 1% of households own about half of all stocks and stock funds, and the top 10% own 88%, according to the Fed's distributional data . The bottom half owns about 2%.

America isn't all in on stocks. Wealthy America is.

Most of the climb also came from rising prices, not a buying spree. When stocks rally and everything else sits still, stocks take up a bigger slice of the pie on their own.

History suggests a crowded trade tends to deliver less.

When stocks made up less than 20% of household financial assets, the S&P 500 ( ^GSPC ) went on to gain a median of about 11% a year over the next decade, according to Yahoo Finance calculations using price returns since 1951. When the share topped 30%, that fell to about 5%.

The logic is simple. A low share means plenty of money is left to move into stocks, usually at bargain prices. A high share means much of that buying has already happened, and valuations are stretched.

It's a decade-long signal, not a timing tool. Most of the high readings came from the late-1990s bubble and the years before the 2008 financial crisis. Today's level is beyond anything in the record.

What it can do is prompt a portfolio checkup. An investor who set a 60/40 mix of stocks and bonds at the start of 2023 and never rebalanced would now have about 73% in stocks, by Yahoo Finance calculations.

That's a lot more risk than they signed up for.

With this much wealth tied to the market, a sell-off like the one hitting AI stocks can dent consumer spending faster than it used to. Household balance sheets still have room to absorb one.