SummarySummary 3Analysis of the situation 3Research on portfolio theory 4Variables explaining stock holding 5Factors to try to explain the phenomenon 7Conclusion 11References 12SummaryAt the very basis of this article lies the analysis of the limited stock of households market participation phenomenon. The relevance of the question is discussed through the perspective of theories of finance, with particular attention to model portfolio theory. Given the perspective of one of the largest stock markets - the market of the United States of America - the phenomenon is first of all presented as arising from behaviors related to stock holding. It is important to identify the characteristics of a typical U.S. shareholder in order to draw additional conclusions about the causes of the problem. In the following chapters, the variables used in recent research to try to explain the phenomenon are presented. Our article further examines the contextual risks facing households and financial literacy. These were chosen by our team as being particularly relevant and likely among the main causes of limited household participation in the stock markets in the United States. Situation AnalysisIt is known that a large number of households in the United States do not participate in the stock markets. Looking at historical trends in this phenomenon, according to a Panel Study of Income Dynamics (PSID), conducted in 1984 with a sample of 2,998 families, only a small percentage of households held stocks – 27 .6% (Mankiw, Zeldes, 1991). Among families with $100,000 or more in liquid assets, only 47.7% owned stocks (Mankiw, Zeldes, 1991). Recent studies have estimated that even during the 1990s, when there was significant growth in the US stock market...... middle of paper ......mouth.edu/~alusardi/Papers/ Nether/LiteracyPaper_Lusardi.pdf April 23, 2014The Federal Reserve Board. (2011). Limited market participation and asset pricing in the presence of earnings management. Retrieved from: http://www.federalreserve.gov/pubs/ifdp/2011/1019/ifdp1019.htm on April 24, 2014. Best Universities. (2012). How much does it cost to study in the United States? Retrieved from: http://www.topuniversities.com/student-info/student-finance/how-much-does-it-cost-study-us on April 23, 2014 Wike, R., Holzwart, K. (2008). Where trust is high, crime and corruption are low. RewResearch Project on Global Attitudes. Retrieved from: http://www.pewglobal.org/2008/04/15/where-trust-is-high-crime-and-corruption-are-low/ April 24, 2014 Global Stock Exchanges. (2012). List of stock exchanges around the world. Retrieved from: http://www.world-stock-exchanges.net/ on April 23 2014