The implications of surging stock ownership on future returns

American households' high percentage of stock holdings could lead to lower-than-average stock returns over the next seven years, according to Wall Street veteran Joseph Lavorgna. The U.S. household equity share of total financial assets was 36.3% in Q3 2023, down from a record of 40.5% in Q4 2021 but still well above previous periods. Lavorgna explains that historically, when households have a high percentage of equities in their investment portfolios, future stock returns tend to lag historical averages. He suggests that stock returns over the next seven years may be lower than the historical average of double-digit gains.