Investment 1995 - 2004
By John Schroy, on February 27th, 2006 | 
In 1995, US households held similar amounts of assets in home equity and corporate stocks: US$ 4.3 trillion in stocks and US$ 4.7 trillion in home equity. Over the decade, the situation changed dramatically, so that by 2004, households held US$ 4.8 trillion more in home equity than in corporate stocks.
This difference came about because of the crash in the stock market in 2000-2001 and because of the steady increase in home values throughout the decade. Low interest rates and easier terms on home mortgages pushed prices of residential real estate upwards, while individuals favored indirect investment in stocks through mutual funds over direct holdings.
'Defined Benefit' Pension Plans
By John Schroy, on February 26th, 2006 | 
The sponsors of ‘defined benefits’ pension plans controlled, as of December 2004, about US $2.5 trillion in equities. Common stocks, even after the crash of 2000-2001, were substantially over-valued. In order for stock prices to reflect values that were customary before the advent of stock buybacks, prices would have to drop between 20% (earnings basis) and 50% (dividend yield basis).
In the case of ‘defined benefits’ pension plans, this would represent a loss of between US$500 billion and US$1.2 trillion in market value of pension portfolios.
US Equities
By John Schroy, on February 25th, 2006 | 
Over 55% of corporate stock that belongs to US Households and Nonprofit Organizations is held indirectly through intermediaries who have the power to vote these shares.
The major holders of these voting powers are pension plans and mutual funds.
This means that it is not shareholder-owners that control most US public corporations, but hired intermediaries, each of which have conflicts of interest.
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