The Shrinking Stock Market

Since 2000, the U.S. stock market has been shrinking. USA Today has some numbers:

The Wilshire 5000 index is a market measure of all the U.S.-based firms that have shares that can be traded. For decades, it’s been a proxy for the size, breadth and value of the entire stock market.

But even the Wilshire 5000 can’t maintain enough companies to reach its namesake number. There now are 3,678 companies in the index, is down by more than a third in a decade and off by nearly half from its level in 2000, says Wilshire Associates.

The number of publicly traded companies always ebbs and flows, but the current number has fallen steadily since at least 2000. At 3,678, the number of companies available for the public to invest in is much closer to the low of 3,069 in February 1971 than to the high of 7,562 in July 1998. Granted, there are thousands of stocks traded on “Pink Sheets” and other lightly or unregulated markets, but the Wilshire 5000 only includes those that trade on an exchange such as the New York Stock Exchange or Nasdaq.

It’s not just a blip with the Wilshire 5000. The total number of listed securities trading on the Nasdaq OMX and NYSE Euronext exchanges was 4,916, according to the World Federation of Exchanges. The number of listed securities on these two critical exchanges has fallen every year since 2009 and is down 32% since 2000 and 39% from the recent peak in 1997. Making that more troubling: That number includes listings that aren’t companies, such as exchange-traded funds, which have soared in popularity.

Posted by on March 27th, 2013 at 12:19 pm

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