, Columnist
The 'Dumb Money' Is About to Become Very Influential
Household holdings of equities and mutual funds account for over 60 percent of total liquid assets, or about $7 trillion above the historic average.
Households are partying.
Photographer: KeystoneHouseholds are often viewed derisively on Wall Street as the "dumb money," buying at the top and selling at the low. Nevertheless, they can have a big impact on markets, and we could be at the cusp of one of those times.
Consider that household liquidity is the strongest it’s been in almost two decades, with the market value of liquid assets -- which includes cash, time deposits, credit market instruments, corporate equities and mutual funds but not pensions and insurance reserves -- at 2.9 times liabilities. That’s the second highest ratio of the last 40 years, topped only by 2000's reading of 3 times, according to the Federal Reserve's quarterly Flow of Funds report.