US, Canadian Investors Near 60% Allocation to Stocks

The Kobeissi Letter reported that investors in the US and Canada now hold nearly 60% of their financial assets in stocks. The note said that reading exceeds allocations recorded before the 2000, 2007 and 2021 bear markets and leaves household and institutional balance sheets more exposed to declines in equity prices.

The Kobeissi Letter compared regional allocations and reported that Scandinavian investors hold about 50% of assets in equities, investors across Europe about 31%, and Japan about 20%.

Equity gains this year were concentrated in a narrow group of companies tied to artificial intelligence. Jim Bianco, president and macro strategist at Bianco Research, calculated the S&P 500 rose 8.03% since late February while the index excluding AI-related names rose 1.04% over the same period. At a recent peak, AI-linked firms represented roughly 49% of the S&P 500’s market capitalization. Bianco described the pattern as “the most concentrated the stock market has been on a single theme since the railroad stocks of the late 19th century.”

Market action in early June illustrated the split: between June 2 and June 10 the S&P 500 fell about 4.5% while the subset of the index excluding AI names posted gains. The Kobeissi Letter warned a pullback in dominant positions would reduce household and institutional wealth by more than headline indexes indicate.

The Kobeissi Letter noted the concentration could increase as more AI-linked companies list publicly. SpaceX completed a listing this month, and market observers expect Anthropic and OpenAI to follow, which would add further AI weight to US equity benchmarks. The Kobeissi Letter wrote, “This exceeds peaks seen before bear markets in 2000, 2007, and 2021.”