If you are starting out in conventional or online stock trading, it’s likely you are doing so for earning more income. If you are investing in some stock for the long term, you are doing so for increasing your savings for a later period such as retirement. You might find the following information interesting.

Number of Publicly Trading Stocks Down to Lowest Point

The number of stocks available for trading publicly has come to the lowest point since 1979, according to a study by Wilshire Associates, the investment manager. The decreasing publicly traded stocks actually coincide with increasing corporate profitability. What this means is that investors have lesser options to generate income and accumulate wealth. They now have only 3,659 stocks available for trade through public markets.

There were 7,562 stocks available for public sale on July 31, 1998. That’s the all-time high. Since then there has been a significant drop. According to the Wilshire index, there has been an over 50% decrease from the peak of 1998.

Parallel Trends

This decline can be blamed on various market trends:

  • In the 1990s, there was a clamor for initial public offerings (IPOs). Many companies were looking to go public. This coincided with the aforementioned public stock number rising to 7,562. The number of IPOs has declined significantly since then though. Before the high of 1998, there were 848 companies that went public in 1996. 18 years later, there were only 292 companies that went public in 2014. However, in 1996 the 848 companies that went public could only raise $78.6 billion while in 2014 the 292 companies raised $96 billion. This is proof that the initial public offerings got much larger in between.
  • Companies these days are looking at generating other methods of funding such as venture capital while remaining private. Some larger firms raise the required capital through pre-IPO. Examples are Uber and Airbnb.
  • The increase in the number of mergers and acquisitions (M&A) is another observation coinciding with the decreasing number of stocks publicly available. There has been nearly $1.1 trillion worth of buyouts thus far in 2016. This is also the third consecutive year when the M&A activity has risen above $1.1 trillion. Larger firms are increasingly looking for opportunities to buy smaller firms for acquiring their technology, getting access to new markets, or facilitating growth. Mergers have contributed to reduce the number of public companies.
  • Finally, the rising corporate profitability can be considered another parallel phenomenon. According to market data, corporate profitability has seen a steady rise as the number of stocks traded publicly decreased. According to data from the Commerce Department, non-financial companies in the US could generate $478 billion of before-tax domestic earnings in 1995, while during the 12 months ending in 2016 Q3, non-financial companies had made $1.3 trillion. During this period there was also an increase in the operating profits of the S&P 500-listed companies from 6.7% of sales to 9.2%.

So as you see, now is the time to start trading stocks online and investing. The opportunities are dwindling and you need to maximize the opportunities when they come to you. That’s you have TradeZero offering you advanced trading software to help have a clear picture of the market and make the right trades. Get in touch with us at +1 954-944-3885, or just email us at support@tradezero.co.

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