Skip to main content

Where Have All the U.S. Stocks Gone?

A recent Wall Street Journal article, citing a study by the Center for Research in Security Prices, tells us something remarkable about the times we are investing in: the number of stocks on the U.S. market has quietly diminished by more than half over the last 20 years. In November 1997, investors could choose from 7,355 U.S. stocks. Today, there are fewer than 3,600.  

Most of the decline has come from vanishing companies ranging from small to microcap — the sort of names you probably haven’t heard of. Small stocks have diminished from more than 2,500 in 1997 to fewer than 1,200 today. Microcap companies that are even smaller numbered nearly 4,000 in 1997, compared to 1,900 today. Some went out of business, while others were gobbled up by larger companies or private equity firms. Meanwhile, instead of new companies going public to replace those that have retired from the market, venture capital firms are allowing younger ventures to stay private for longer.  

The article talks about several possible consequences. Since the surviving companies tend to be larger and better known, it becomes harder for professional asset managers to get an information edge or find small undiscovered gems that are undervalued. The declining roster of stocks may also mean that a long era of higher returns from small cap stocks compared to larger firms could be coming to an end or somewhat diminished. But the truth is that nobody knows what the investment consequences will be from the quiet shrinkage of investment options, or for that matter, if this trend will reverse itself.  

To Your Prosperity, 

Kevin Kroskey, CFP®, MBA

Adapted with permission from BobVeres.com
Source: https://www.wsj.com/articles/stock-picking-is-dying-because-there-are-no-more-stocks-to-pick-1498240513

Popular posts from this blog

Common Estate Planning Mistakes

The most common way to transfer assets to your heirs is also the messiest: to have a will that is so out of date that it doesn’t relate to your property or estate, to have your records scattered all over the place, to have social media, banking and email accounts whose passwords only you can find—and basically to leave a big mess for others to clean up.   Is there a better way?   Recently, a group of estate planning experts were asked for their advice on a better process to handle the transfer of assets at your death, and to articulate common mistakes.   The list of mistakes included the following:   Not regularly reviewing documents.   What might have been a solid plan 15 or 20 years ago may not relate to your estate today.   The experts recommended a full review every three to five years, to ensure that trustees, executors, guardians, beneficiaries and healthcare agents are all up-to-date.   You might also consider creating a master document which lists all your social m

Major Changes in Northeast Ohio Health Insurance Marketplace & Open Enrollment

The Affordable Care Act -- aka Obamacare -- has become an important program for many retirees who need health insurance to bridge the gap from when employer coverage exhausts until eligible for Medicare at age 65. For those utilizing these plans and especially those that use Medical Mutual of Ohio for their insurance, it's time to review your options during the open enrollment season. As reported earlier this year, in partnership with New York City-based Oscar Health , Cleveland Clinic announced it is making its first entrance into the health insurance market with a product bearing its name. The co-branded health insurance plan will be available in Cuyahoga, Summit, Lorain, Medina and Lake with coverage beginning Jan. 1, 2018. The Clinic also will not be participating in Medical Mutual of Ohio's (MMO) -- a large insurer of northeast Ohioans and headquartered in Cleveland -- individual ACA products in 2018, as Crain's Cleveland Business  first reported. MMO switched to