A record 89% ownership by the wealthiest 10 percent of Americans of U.S stocks is a sign of how important the stock market plays in increasing inequality of wealth.

The top 1% gained over $6.5 trillionThe Federal Reserve’s latest data shows that the top 10% accumulated $1.2 trillion more in mutual funds and corporate equities during the Covid-19 Pandemic. In the second quarter of 2018, the highest share of mutual funds and corporate equity owned by top 10% was at an all-time high, while bottom 90% Americans had about 11% stock holdings, a drop of 12% from before the pandemic.

Stock market has been a major contributor to the growth of this stock market. nearly doubled since the March 2020 drop and is up nearly 40% since January 2020, was the main source of wealth creation in America during the pandemic — as well as the main driver of inequality. According to Fed data, the total wealth of America’s top 1% is now at 32%. This record amount represents a significant increase in wealth. Nearly 70% of their wealth gains over the past year and a half — one of the fastest wealth booms in recent history — came from stocks.

Steven Rosenthal is senior fellow at Urban-Brookings Tax Policy Center. He stated, “The top 1 percent own lots of stock. The rest of us have very little.”

This growing wealth is despite the millions of investors who entered the stock market during the pandemic. Many have called it “the democracy” of stocks. Robinhood added more than 10 million new accounts over the past two years and now has more than 22 million — many of them held by younger, first-time investors.

The market might be more well-known, but the wealth and gains it generates is not more evenly distributed. Rosenthal claimed that, while the army of new investorsDespite being numerous, Robinhood accounts are still relatively small at $4,500. They will see a decrease in dollar gains as markets improve than wealthy investors who have hundreds of thousands, if not millions, stock holdings.

Rosenthal explained that “many younger investors” bought in at higher price than those who had been investing for many years. This was in contrast to larger investors who see bigger gains and have been around the market longer.

What’s more, many of the new investors have more of a trading mentality — buying and selling stocks rapidly, with leverage, in hopes of quick gains. This strategy is a great way to make huge profits. However, it may not be for everyone. Investors who buy and keep stocks long-term will see higher returns.

According to the Fed, the top 10% of stockholders saw their stock value rise 43% between January 2020 – June 2021. The bottom 90% saw stock wealth rise at a lower rate — 33%.

Rosenthal stated that although they might make up a greater share of the trading activity, it is still different than ownership or wealth.