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Less people are invested in the stock market today than at any time in nearly the last two decades. The impact of the market might hurt employee wages and job prospects but it is less likely to hurt their stock portfolio because they don't have one. According to the U.S. Federal Reserve only 48% of Americans own stocks, which is down from an '07 peak of 65% (includes nondirect investments such as mutual funds in 401(k) accounts). Even fewer Americans, 14%, own individual stocks.
“People are still very squeamish about the volatility of the stock market,” says Greg McBride, chief financial analyst at Bankrate. “The recession of 2008 is still fresh in a lot of people’s memories.” These post-recession jitters, McBride says, are “counter to what we’ve seen in previous cycles”--periods in which stock market participation grew as economic confidence returned. That’s in part because of the sheer size of the recession, the worst since the Great Depression. What’s harder to quantify, though, is the corresponding loss of faith. By American standards, confidence in the marketplace remains unusually shaky, according to Richard Wolff, an economics professor at the New School. People today don’t have as much faith as they once did in the hordes of economists and financial gurus encouraging them to invest...
