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Topics Covered
- US market
- Capital markets
- IPOs
- Mergers
- Trading
- Liquidity
- Treasury
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Talk Citation
McDonald, M. (2023, April 30). The shrinking stock market [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved December 7, 2024, from https://doi.org/10.69645/ECJL9017.Export Citation (RIS)
Publication History
Transcript
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0:00
Hello, I'm Professor
Michael McDonald.
I'm a professor of finance at
Fairfield University in
Fairfield, Connecticut.
Today, I'd like to talk to you
about an under the radar trend
that's extremely important to
the future of the
financial markets.
That is what I refer to as
the shrinking stock market.
0:20
What a lot of people
don't realize is that
the US stock market has
actually shrunk over time.
Not in terms of market
capitalization necessarily,
but in terms of the
number of firms.
Moreover, this shrinkage
in the number of firms
has been dramatic and
prolonged over time.
In 1997, the number of
publicly traded companies in
the US stock market peaked at
roughly 10,060 publicly
traded stocks,
representing about
9,700 firms out there,
because some companies have
class A and class B
shares, for instance.
This includes some
investment companies,
closed-end funds,
things like that.
But big picture, it's about
10,000 publicly traded stocks.
By the time we get
to January 2015,
there are 5,000 firms.
That was actually up 100
companies over the
previous year.
That was the first
time that we'd seen
annual growth in the number of
firms in the market since
the Internet boom at
the end of the 1990s.
For essentially a
15-year period,
we had a shrinking stock market.
The New York Times talked
about this in 2010 saying,
despite all of the
excitement over, say,
General Motors coming back to
the NYSE after their bankruptcy,
the markets are actually
getting smaller, not bigger.
What's notable is that
this isn't a world story.
This isn't like stocks
are becoming less
attractive across
the entire world,
this is an isolated example
related to the United States.
This as an American story,
and for that reason it's
very problematic if
you're involved with the
US capital markets at all.
Shrinking stock
market is a result of