- Michael Allison, CFA
- Jun 1
- 2 min read
š Ā Charts of the Week 6/1/2025
By Michael Allison, CFA
Where to Now?
The first Chart this week screams a warning: U.S. households have 71% of their financial assets in equities, just 8% in bonds, and 20% in cash. After a decade and a half-long bull market, this imbalance isnāt surprisingābut it is precarious.
The second Chart helps explain how we got here: since 2009, the S&P 500 Total Return Index has surged nearly 1,000%, while the Bloomberg U.S. Aggregate Bond Index has returned just 56%. When one asset class dominates by that much and for that long, behavioral finance tells us recency bias can take overāand portfolios become dangerously one-sided.
But we are no longer in 2009. Investors are older. According to the Census Bureau, the median age in the U.S. hit 39 in 2022āthe highest on recordāand over 10,000 Americans turn 65 every day. That demographic shift collides with another reality: the majority of equity exposure for many households is held in taxable accounts. So de-risking isnāt just about reallocating capitalāitās about managing embedded gains, tax drag, and sequence-of-return risk.
Asset location matters more than ever. Tax-efficient rebalancing, charitable gifting of appreciated stock, and strategically using Roth conversions or tax-managed funds should be top-of-mind. Meanwhile, replacing part of the equity allocation with hedged strategies, buffered ETFs, or even cash-flow-aligned fixed income can smooth volatility and reduce drawdown risk.
In short, more and more investors need to shift their mindset from āHow much can I make?ā to āHow do I keep what Iāve made?ā The answer lies not just in what you ownābut where you own it.
Sources
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