Retail Investors Go All-In on Stocks as Cash Holdings Hit 9-Year Low

TLDR:

• Retail investors raised stock allocations to 71.8% in September, the highest level since December 2017.
• Cash holdings fell to 13.3%, marking a nine-year low and remaining below the 22.5% historical average.
• Stock fund allocations climbed to 38.35%, while direct stock holdings remained nearly unchanged at 33.44%.
• AAII data showed 53.3% bearish sentiment on September 19, despite equity allocations reaching a nine-year high.

Retail investors are holding their largest share of U.S. stocks in nearly nine years, while cash reserves have fallen to their lowest level since December 2017. According to the American Association of Individual Investors (AAII), equity allocations rose 0.7 percentage points to 71.8% in September 2026.

The reading was the second-highest since July 2000, based on historical data highlighted by The Kobeissi Letter. Meanwhile, cash allocations dropped to 13.3%, reflecting a widening gap between money invested in stocks and funds held in reserve. The figures show how strongly surveyed investors favored equities entering the fourth quarter, despite prevailing market uncertainty.

Retail Investors Push Stock Holdings to 71.8%, a 9-Year High

The October 1 AAII report showed that stock allocations exceeded their historical average of 61.5% for the 76th consecutive month. Equity exposure has also increased approximately 3.3 percentage points since April.

According to The Kobeissi Letter, that represented the largest five-month increase since October 2025. However, the latest increase came primarily through stock funds rather than individual company shares. Stock fund allocations climbed 0.73 percentage points to 38.35% in September.

By comparison, direct stock holdings remained nearly unchanged at 33.44%. The breakdown shows that investment funds accounted for most of September’s increased equity allocation. Nevertheless, the survey cannot determine whether portfolio changes reflected fresh purchases, rising market valuations, or both.

Meanwhile, fixed-income holdings showed a smaller increase. Bond and bond fund allocations rose approximately 0.3 percentage points to 14.9%, remaining below their historical average of 16%.

Cash Falls to 13.3% as Bearish Sentiment Reaches 53.3%

Cash allocations declined approximately one percentage point to 13.3%, marking their lowest reading since December 2017. Additionally, September marked the 46th consecutive month that cash holdings remained below their historical average of 22.5%.

The latest allocation stood 9.2 percentage points below that benchmark. The positioning contrasted with investors’ stated market expectations. AAII’s separate September 19 sentiment survey showed bearish expectations reaching 53.3%, while bullish sentiment fell to 28.8%.

Consequently, the two surveys presented different pictures of investor behavior. Portfolio allocations showed substantial equity exposure, even as more respondents expected stock prices to decline. The divergence also emerged during a period of higher borrowing costs. In September, the Federal Reserve raised interest rates for the first time since 2023.

Still, historically elevated stock exposure does not establish that a market correction will follow. AAII’s findings represent surveyed members rather than every U.S. retail investor, limiting broader conclusions about market positioning.

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