American households, as of December 2004, had accumulated $3,475.1 billion in tax-deferred Individual Retirement Accounts (IRAs), according to the Federal Reserve Flow of Funds Accounts.

The largest portion of these savings were held as “self-directed accounts”, in which a wide diversity of investment are permissible (according to Equity Trust Company), such as:

• Real Estate (apartments, single-family homes, and duplexes);
• Commercial property, developed or undeveloped land;
• Mortgages or Deeds of Trust;
• Publicly traded stocks, bonds, and mutual funds;
• Private limited partnerships;
• Private stock offerings, private placements;
• Private limited liability companies;
• Secured and unsecured notes;
• Judgments, Structured Settlements;
• Tax Sale Certificates;
• Car Paper;
• Factoring;
• Accounts Receivable;
• Commercial Paper; and
• Equipment Leasing.

The graph shows the distribution of individual retirement accounts, by type of custodian:

	Growth of IRA Accounts

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Over the decade, 1995-2004, the demand for U.S. bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion.

According the Federal Reserve Flow of Funds Accounts, six groups made up 90% of net bond buying over the decade:

    Foreign Investors...................................32.7%
    Mutual Funds........................................14.7%
    Insurance Companies.................................13.4%
    Government Sponsored Enterprises....................12.9%
    Banks, Savings Institutions.........................10.1%
    Federal, State, & Local Governments...............6.2%

The graph shows the breakdown of net bond buyers over the decade (the colored bars), against the supply of new bonds (the red line.)

As the graph indicates, only in 1998 and 2003 did bond supply catch up with demand, represented on the graph by the years in which the red buttons are at the top of the bars.

In most years, buyers had to go to the secondary market to get all the bonds they wanted.

(The bars on the graph that extend below zero can be interpreted as bonds acquired in the secondary market. See Flow of Funds Accounts Tables: F209, F210, F211, F212. )

	Supply & Demand: US Bonds

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Stock buybacks by U.S. Nonfarm Nonfinancial Corporations reached an annual level of $208.8 billion in Q3 2004, 76.6% higher than the frantic pace of buybacks at the peak of the Great Bubble in 2000.

The level of buybacks was 3.3 times corporate profits after taxes and dividends — an indication of how anxious corporate executives were to give value to stock options before FASB 123 accounting rules kick in later this year.

Profits before taxes in Q3 2004 were 20% higher than in 2000, but buybacks expanded by 77%.

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