US and Canadian investors now keep close to 60% of their financial assets in stocks. This near-record concentration leaves household and institutional balance sheets heavily exposed to any drop in equity prices.
The reading, flagged by The Kobeissi Letter, sits above the levels recorded before earlier bear markets. It also far outweighs the wealth that investors in Europe and Japan tie to stocks.
A Record Tilt Toward Stocks
The Kobeissi Letter contrasted the regional spread in a recent post. Scandinavian investors hold about 50% of assets in equities, while European investors sit near 31%.
Japan’s allocation stands around 20%, roughly a third of the US and Canadian level. That gap shows how heavily US and Canadian portfolios lean on stock performance.
“This exceeds peaks seen before bear markets in 2000, 2007, and 2021,” the analysts said.
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AI Stocks Carry the Rally and the Risk
The record allocations come as US stocks continue to see notable gains. However, the rally rests on a narrow base.
Since late February, the S&P 500 has gained 8.03%, according to Jim Bianco, President and Macro Strategist at Bianco Research. The same index without artificial intelligence (AI) names rose just 1.04%.
At last week’s peak, AI stocks made up 49% of the S&P 500. Bianco called it the heaviest concentration on a single theme in over a century.
“This is the most concentrated the stock market has been on a single theme since the railroad stocks of the late 19th century,” he said.
The divide showed in early June. When the S&P 500 fell about 4.5% between June 2 and June 10, the non-AI 500 actually rose, per Bianco.
That split matters for households and other investors. Their record exposure sits mostly in a handful of AI firms. A dip in those names would cut deeper than the headline index suggests.
The concentration is set to grow. SpaceX was listed this month, with Anthropic and OpenAI expected to follow, adding more AI weight once public.
With the gains stacked on AI, a stumble in those names would test how broad the rally ever was. Should a correction follow, the record exposure leaves the investors with more wealth at stake
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