Money

How to Profit from the Disappearing U.S. Stock Market

The stock market is the ultimate democratic institution.

It doesn’t care where you came from, where you went to college or even how you earned the money you are investing.

Traditionally, the stock market offered a way to build your wealth by buying into the United States’ fastest-growing companies.

To paraphrase what Barack Obama said to “Joe the Plumber” in 2008, the stock market “helps spread the wealth around.”

Alas, today the U.S. stock market is disappearing before your very eyes.

Mergers and acquisitions, buybacks and burdensome regulation have reduced the number of companies listed on U.S. stock exchanges by around a third since 1997.

According to the University of Chicago’s Center for Research in Security Prices, the number of U.S.-listed companies peaked at 9,113 that year.

Today, that number is just over 5,700.

That’s hardly more than in 1982 when the U.S. gross domestic product (GDP) stood at a nominal $3.35 trillion, compared to $18.56 trillion today.

That’s all because the hottest companies representing the best investment opportunities are shunning the stock market.

Sure, Facebook Inc. (FB) had a high-profile initial pubic offering (IPO) back in May 2012.

Facebook listed at $38 per share, and today trades at around $130, an annualized rate of return of more than 30%.

But think of new household names like Uber and Airbnb.

Investment returns on these companies likely far exceed those on Facebook.

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