Fully loaded

US households have rarely been this exposed to equities.

According to the chart, equities and mutual funds now represent around 47% of total US household financial assets, the highest level in 75 years.

This does not mean that a correction is imminent. Markets can remain expensive, concentrated and widely owned for a long time.

But it does tell us something important: when households already hold a very large share of their wealth in equities, the market has less room to be positively surprised and becomes more sensitive to disappointment.

History does not repeat itself mechanically, but high equity exposure has often coincided with periods where future returns became more fragile.

At ECP, we do not try to predict the next correction. We simply remain disciplined on valuation, diversification and margin of safety.