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Over 55% of the equity shares of US corporations which belong, in the final analysis, to US households and nonprofit organizations, are held indirectly through intermediaries, such as life insurance companies, private pension funds, government retirement funds, and mutual funds.
Decline in Direct Equity Ownership
See: Federal Reserve Flow of Funds Table B100e.
The graph shows how the voting power and hegemony of these financial intermediaries has grown over the decade, 1995-2004.
The percentage of equities belonging to households and nonprofit corporations increased from 42.8% to 55.4% between December 1995 and December 2004.
Investors lost $7.2 trillion in 2000
The next graph shows how households and nonprofits lost, in total, over US$ 7.2 trillion in market value in the collapse of the Great Bubble of the 1990s; this amounted to over 40% of their holdings.
How Americans Hold Stock
Subsequently, the market recovered from the low of 2002, but households and nonprofits were still US$ 2.9 trillion poorer in December 2004 than in December 1999.
In 2004, the value of equities under the control of financial intermediaries reached US$ 7.9 trillion, as the graph shows.
Since these intermediaries had the power to stop the buyback-option schemes that so wildly distorted the US stock market throughout the decade, it would not seem that they exercised their fiduciary responsibilities with prudence.
See: Buybacks and Options.
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