Theoretical question about stock market shift

[GON]

What would happen to the stock market if every person 55 years and older sold one percent of their equity holdings every day over the next 100 trading days? And put that money into fdic insured savings/ certificates if deposit, it US federal government bonds?

I came from a place that people over 55 should be migrating/ migrated out of equities and into federal government backed assets.

Is the market substantially overinflated/ over valued because interest rates, even today's rates, or below long term normals?

Supplemental- what would all the banks, especially community banks, be using the massive amount of deposits in? New construction loans? Business development loans? Originating single family portfolio mortgages?

 

[Astro14]

The market has been the only attractive place for investing because of interest rates. If rates hold steady and inflation remains low - bonds may regain some of their attractiveness.

I've never thought that anyone should be in 100% bonds. Where did you get that from?

The old rule of thumb is that your bond percentage should be roughly the same as your age. In other words, if you're 80, you still own some stocks.

And savings accounts? Are you serious? Check what most banks are paying on savings accounts - here's one, USAA - it's 0.01% on small balances. That's a crime. I had a six figure balance, and got all the way up to 0.1%. Still criminal when I can get 3.5% from companies like Vanguard or Alliant Credit Union.

https://www.usaa.com/banking/savings/rates/

My safe may not have FDIC insurance, but it's basically paying the same rate - ZERO - as USAA.

Not a great place for your money, either.

 

[Pablo]

It would work generally about as bad as income redistribution

And just couldn’t happen. Making yet another forced schism in society already fractured has many unintended consequences

 

[The_Jeff]

How much stock is just owned by companies and institutions? Would it even matter if people sold off?

It's been a while since I looked at P/E ratios but stocks were overvalued years ago and likely even more so now, if you look at them based on what they can pay you in profits vs just you finding some other sucker to sell the stock to next year.

 

[Astro14]

How much stock is just owned by companies and institutions? Would it even matter if people sold off?

It's been a while since I looked at P/E ratios but stocks were overvalued years ago and likely even more so now, if you look at them based on what they can pay you in profits vs just you finding some other sucker to sell the stock to next year.

Don't forget that institutions also includes mutual fund companies.

So, when you read that the stock market is, say, 70-80% owned by institutions, a lot of the money is actually owned by individual investors in their 401(k), IRA, etc. investments via mutual funds.

 

[joekingcorvette]

People would have to be really afraid of a market collapse to put most of their money in savings or bonds. Inflation will continue and you need stocks to build wealth. The stock market historically keeps going up and it will hopefully continue to do so long term. Just keep enough money in safe investments to make it 5 years or longer and continue to invest. People with 401k's and your upper 10% of the more financially stable investors will keep the market going. Young people are more educated and fearful of a diminished form of SSI income too and will take their 401K company plus a company match. I know lot's of people including myself that run a portfolio from their cell phones on a regular basis. I could go on and on about this but it's kind of a blanket statement.

 

[Pablo]

How much stock is just owned by companies and institutions? Would it even matter if people sold off?

It's been a while since I looked at P/E ratios but stocks were overvalued years ago and likely even more so now, if you look at them based on what they can pay you in profits vs just you finding some other sucker to sell the stock to next year.

Around 25% just by companies but it’s a bit murky because some of those shares are for employees for example. Public companies of course. Institutions are a whole different category because as others have stated- huge numbers held my mutual funds which are mostly held by individuals investors

 

[GON]

The market has been the only attractive place for investing because of interest rates. If rates hold steady and inflation remains low - bonds may regain some of their attractiveness.

I've never thought that anyone should be in 100% bonds. Where did you get that from?

The old rule of thumb is that your bond percentage should be roughly the same as your age. In other words, if you're 80, you still own some stocks.

And savings accounts? Are you serious? Check what most banks are paying on savings accounts - here's one, USAA - it's 0.01% on small balances. That's a crime. I had a six figure balance, and got all the way up to 0.1%. Still criminal when I can get 3.5% from companies like Vanguard or Alliant Credit Union.

https://www.usaa.com/banking/savings/rates/


My safe may not have FDIC insurance, but it's basically paying the same rate - ZERO - as USAA.

Not a great place for your money, either.

I think it is reasonable to assume community banks would offer savings account yields not so far off iof CD rates if there was a substantial increase in saving account deposits. And those savings were projected to be in those seasoned American citizens accounts for a longer term.

 

[Pablo]

A bunch of pissed off geezers yelling at the clouds!

 

[GON]

People would have to be really afraid of a market collapse to put most of their money in savings or bonds. Inflation will continue and you need stocks to build wealth. The stock market historically keeps going up and it will hopefully continue to do so long term. Just keep enough money in safe investments to make it 5 years or longer and continue to invest. People with 401k's and your upper 10% of the more financially stable investors will keep the market going. Young people are more educated and fearful of a diminished form of SSI income too and will take their 401K company plus a company match. I know lot's of people including myself that run a portfolio from their cell phones on a regular basis. I could go on and on about this but it's kind of a blanket statement.

If the market was to repeat a 1929 drop, would it impact you at your age?

During the infamous 1929 market crash, the Dow Jones Industrial Average (DJIA) plunged 25% over just four days, but its total drop over the entire bear market reached 89% from its 1929 peak by the time it bottomed out in July 1932.

 

[GON]

How much stock is just owned by companies and institutions? Would it even matter if people sold off?

It's been a while since I looked at P/E ratios but stocks were overvalued years ago and likely even more so now, if you look at them based on what they can pay you in profits vs just you finding some other sucker to sell the stock to next year.

As of early 2026, Baby Boomers control over half of the U.S. stock market, with estimates placing their ownership at roughly 51% to 54% of all corporate equities and mutual funds, according to early 2026 analysis of Federal Reserve data. When including all Americans over age 55, that ownership share rises to roughly 80% of stocks.Total Stock Ownership: Baby Boomers (born 1946–1964) own roughly $25 trillion+ in stocks, making up over 50% of the total market.

 

[doitmyself]

As of early 2026, Baby Boomers control over half of the U.S. stock market, with estimates placing their ownership at roughly 51% to 54% of all corporate equities and mutual funds,

Just try to hang on. We're dying as fast as we can to rectify the problem.

 

[Pablo]

Just try to hang on. We're dying as fast as we can to rectify the problem.

Yep. World problems will be solved by go getter millennials!

 

[joekingcorvette]

If the market was to repeat a 1929 drop, would it impact you at your age?

During the infamous 1929 market crash, the Dow Jones Industrial Average (DJIA) plunged 25% over just four days, but its total drop over the entire bear market reached 89% from its 1929 peak by the time it bottomed out in July 1932.

Yes, if the market were to totally crash it would impact myself and everyone else even if they didn't have any investments. I highly doubt the market will crash and I don't see why anyone would want to get out of the market right now unless something would make them panic sell. Basically everyone is in the same boat. If the market goes down people stop spending aimlessly which slows down some businesses. If that happens it's a buyers market.

 

[Pablo]

If that happens it's a buyers market.

That part would be great!

 

[NibbanaBanana]

What would happen to the stock market if every person 55 years and older sold one percent of their equity holdings every day over the next 100 trading days? And put that money into fdic insured savings/ certificates if deposit, it US federal government bonds?

I came from a place that people over 55 should be migrating/ migrated out of equities and into federal government backed assets.

Is the market substantially overinflated/ over valued because interest rates, even today's rates, or below long term normals?

Supplemental- what would all the banks, especially community banks, be using the massive amount of deposits in? New construction loans? Business development loans? Originating single family portfolio mortgages?

Not sure, to answer your original question.

But I think the latest inflation print was 6%. And that's from the government who is exactly the cause of inflation by their money printing and deficit spending. So I take it with a grain of salt. To take a lot of money out of real assets and hold in cash that is rotting away under inflation would be a huge mistake. Going long duration anything would be a mistake under these conditions. High asset prices make perfect sense to me. Except maybe some of the tech sector.

Are the US politicians going to stop their deficit spending and balance the budget? Is the US going to pay off it's $40 trillion national debt? Are international transactions going to stop migrating away from the dollar to the yuan, gold and other currencies?

Who knows. Not me, that's for sure.

 

[SC Maintenance]

The top 1% own half of all equities and the top 10% own 90%. So if they sold off there not going into fdic for countless reasons, one being there only insured to 250K.

Also would be a taxable event. Much of those are being held to pass on to children without taxation.

So your thought experiment is very unlikely.

If / when people start selling equities the market will go down and bonds will go up just like they always do. It wouldn’t take some huge percentage either. 10% or less would likely do it.

 

[mrvmax]

I highly doubt the market will crash and I don't see why anyone would want to get out of the market right now unless something would make them panic sell. Basically everyone is in the same boat.

Crash like 1929? Probably not but I think we are headed for a correction. I can think of a few reasons why someone would get out of the market now (like I did). One, I sold off everything where I had made a profit. The goal is to make money, not to lose so I got out while up (and most of mine were up a lot). And that dumb saying that you haven’t lost anything until you sell only works in theory. Whether you sell or not, if your accounts drop 50% you lost 50%, there is no guarantee you will recover. You cannot bank on everything going up since some may go to zero (think about the subprime lending debacle). If you can stay in the market long enough you can recover, but not everyone can do that. Two, I am getting close to retirement and taking a 50% loss would cause me to have to work longer before I can retire.

 

[doitmyself]

What would happen to the stock market if every person 55 years and older sold one percent of their equity holdings every day over the next 100 trading days? And put that money into fdic insured savings/ certificates if deposit, it US federal government bonds?

I came from a place that people over 55 should be migrating/ migrated out of equities and into federal government backed assets.

Is the market substantially overinflated/ over valued because interest rates, even today's rates, or below long term normals?

Supplemental- what would all the banks, especially community banks, be using the massive amount of deposits in? New construction loans? Business development loans? Originating single family portfolio mortgages?

Thank goodness we can rely on the federal government/FDIC to protect us should there be a meltdown (opinion gleaned from my dad (RIP), lol).

Being sarcastic in case anyone wonders.

 

[joekingcorvette]

Some people on this forum got out or partially out of the market some time ago. The market has had a terrific run the last year and those people left a lot of money on the table. I keep most of my money in the market but have enough funds available where I won't need to sell anything for quite a while. I sold some stocks in 2008 and regret not staying in the market with those funds. Everyone has different investment strategies.