It puts a different spin on the intense bull run that equities went on dating back to spring 2020, with the S&P 500 more than doubling in value, rising from 2,304 in March 2020 to close at 4,769 on the last trading day of last year. That figure even factors in the market slipping into a bona fide bear market in 2022 amid surging inflation and the souring of pandemic darlings, for instance the “crypto winter” and the end of meme-stock mania.

These figures are all the more remarkable considering that they are not equivalent to ratios of stock ownership. In fact, the number of Americans who hold any stocks at all also hit a record, with 58% of all Americans invested in equities in some form, also according to Fed data. This means that many of us own stock, but only the top 10% have truly valuable holdings.

The figures are a reminder that the rising tide of the past year hasn’t necessarily lifted all boats, revealing that even as the ranks of retail investors swelled, the surge in stock values accrued overwhelmingly to the top. 

That’s a function of basic math. The 84% rise in the S&P 500 since the depths of 2020 is worth a lot more in dollar terms when it’s applied to a starting amount of $100,000 than to a retail investor who’s putting in $2,000. 

“The higher up the income ladder you go, the more likely someone owns assets like stock and retirement accounts, and also, on average, the more they will have,” said Steve Rosenthal, a senior fellow at the Tax Policy Center. “The rich will have mega accounts, including mega IRA accounts, and the middle class and poor may own some stock, but it will be very little.” 

The average equity holdings of the wealthiest tenth, which in 2022 included households worth $1.9 million or more, was $608,000 — a figure that includes stock held outright as well as shares in retirement or mutual funds. Meanwhile, the poorest half of Americans (households with a net worth $192,000 or less) typically had stock holdings worth just $12,500.

Even within the richest sliver, nearly all the growth in stocks has gone to the top 1%, said Chuck Collins, who directs the inequality program at the left-leaning Institute for Policy Studies.

Two decades ago—in the wake of the dot-com bust—the wealthiest 1% held 40% of the wealth in public markets; today, their share is 54%.

And Collins believes that’s by design. The policies of the past decade “have encouraged asset growth and discouraged wage growth,” he said. “As much as wages have gone up, the rules of the economy have been tilted to asset owners at the expense of wage earners.”

In his view, and in the belief of many progressive economists, the impressive stock gains of the past few decades are directly tied to policies that reduce how much money people can earn in other ways, including wages, pensions, and taxes that can redistribute gains from the richest to the poorest.  

There's “tax cuts and tax avoidance at the very top, and very low minimum wages that don’t reflect the productivity gains among average workers,” Collins said. Since the late 1970s, even as American workers got more productive, their pay fell far behind the value they were contributing, a shift that coincided with the popularity of the Friedman doctrine, which held that corporations’ only purpose was to make money for shareholders. 

Since the late 1970s, Collins notes, “the productivity gains have mostly gone to equity, and to stockholders.”

More classically liberal (as in Adam Smith) proponents of free markets argue this is a good thing: Long-term, equity markets have provided the best return of any asset class, and encouraging broad participation in these markets is one way to spread prosperity widely, goes the argument. It’s the thinking behind, for instance, the rise of 401(k) plans in the place of pensions, and George W. Bush’s philosophy of an ownership society — people can have better results managing their own money than if they expect society to provide it for them.

But today’s markets are far narrower than they once were, and not just in terms of ownership. The stock market’s 20% rise this year has been fueled by just a handful of superstar companies. The so-called magnificent seven have a market cap equal to the stock markets of Canada, Japan and the United Kingdom, Apollo Chief Economist Torsten Slok noted this month.

This type of concentration discourages participation by boosting the most successful stocks above the level many investors can afford. And the era of “easy money,” as ultra-low interest rates were derisively called, allowed many firms that would have formerly floated on stock exchanges to sell to private equity, shrinking the total number of companies that are publicly traded—by more than 40% since the mid-1990s. (To their credit, commentators such as economic historian Edward Chancellor decry the distortions from such abundant capital.) Likewise, the current state of the market, in which 1% of Americans control more than half the stock-market wealth, offers another perspective on the pandemic’s economic boom, and why an economy that’s strong in the aggregate is leaving many people cold. 

“The whole idea that there's this democratization of the markets is way overhyped. 93% of all assets are in the top 10%— I don’t know what kind of democracy you’re living in,” said Collins. “The four-decade-long wealth surge to the top is basically continuing.”