The latest asset allocation data has been released, and the situation is a bit tense.

According to the AAII December 2025 survey, retail investors have fallen into a state called "full investment"—sounds professional, but in reality it’s all in. The numbers are striking: stocks and stock funds account for 70.8%, cash only 14.8%, bonds 14.4%. Comparing with historical averages, stocks are 8.8 percentage points above, and cash is 8 points below.

What does the 70.8% stock allocation mean? In the past 15 years, it has only been higher twice—71.39% in November 2021 and 71.2% in November 2025. In other words, currently at about the 90th percentile historically. The most exaggerated is the cash ratio; over the 15-year chart, this is the lowest or near the lowest, meaning retail investors basically have no "ammunition" left.

**Huge contrast within the year**

In April, due to tariff fears, stock allocation once plummeted to 64.10%. Then, over the next 8 months, it rebounded by 6.7 percentage points to the current level. During the same period, the S&P 500 rose 24%, and the Nasdaq increased 33%—creating a positive feedback loop: the bigger the rise, the more retail investors疯狂加仓 (frenziedly add positions), which in turn pushes the market higher.

Even more interesting is the long-term trend of cash allocation. From 2010’s 20-22%, it has steadily declined to the current 14.8%. Even during the Fed’s high-interest rate period in 2023-2024, money market fund yields exceeded 5%, yet retail investors significantly reduced cash holdings—this shows that FOMO (Fear of Missing Out) completely overwhelmed the "interest income attractiveness."

**Echoes of history**

When do such extremely high stock allocations usually occur? Near the end of a bull market or at the top of a bubble.

What about after the 71.39% in November 2021? The SPAC bubble burst, and in 2022, the S&P plunged 19%. The 72-73% allocation in 2017, driven by optimism over tax reform, resulted in a 20% crash in Q4 2018. The only extreme opposite was in March 2020, during the pandemic panic, when it dropped to 54%, which was a true bottom opportunity.

The current situation is very similar to late 2021: high stock allocation + low cash allocation—"ammunition exhausted." Imagine if the market suddenly drops 10-20%, retail investors have no cash to buy the dip, and all they can do is panic sell, which could push the decline even deeper.

**The strange phenomenon of low bond allocation**

There’s another anomaly. The 10-year yield is now 4.17%, whereas in 2021 it was only 1.5%. Theoretically, bonds should be more attractive, and retail investors should increase their bond holdings. But in reality, bond allocation has fallen to 14.4%, below the average of 15.9%.

This is driven by one sentence: stock frenzy has completely squeezed out bond demand. The classic "60/40 portfolio" (60% stocks, 40% bonds) has been thoroughly abandoned by retail investors.

Summary: Retail investors’ current asset allocation is approaching historical extremes, with almost no emergency funds left, and psychologically dominated by FOMO. Such a situation usually doesn’t last long in history.