Hi Jeremy. This is a good question. Increased demand for stocks certainly ought to push prices up, that's simply supply and demand. But I think you have to think about what has happened with pensions, which also own huge amounts of stock. 401(k) plans have basically replaced pensions for a lot of Americans. So in theory there ought to be less demand for stocks from pensions even as there is more demand from 401(k)s. I haven't researched this, it's just my guess. Also brings to mind the Republican plans to privatize Social Security, which would mean a chunk of Social Security funds currently parked in government securities would go into stocks instead. That could be a big new source of demand for stocks but who knows what would happen with Treasuries. Anyway that has never come close to passing and it might be a bad idea.
Hi Jeremy. This is a good question. Increased demand for stocks certainly ought to push prices up, that's simply supply and demand. But I think you have to think about what has happened with pensions, which also own huge amounts of stock. 401(k) plans have basically replaced pensions for a lot of Americans. So in theory there ought to be less demand for stocks from pensions even as there is more demand from 401(k)s. I haven't researched this, it's just my guess. Also brings to mind the Republican plans to privatize Social Security, which would mean a chunk of Social Security funds currently parked in government securities would go into stocks instead. That could be a big new source of demand for stocks but who knows what would happen with Treasuries. Anyway that has never come close to passing and it might be a bad idea.