America's Stock Market is Shrinking (2015)

It is 2015 and believe it or not, the American stock market is shrinking. More and more companies are disappearing from the stock market and hardly any companies are entering the stock market. As of right now, the blame is on the companies. Back during the summer of 1998, the number of publicly listed U.S. stocks were at a record breaking 7,562 and now they are at just only 3,812.

How did this happen? There are five main causes for the shrinkage of the stock market according to experts: the internet businesses, rising M&A, failing IPO, more companies leaving the stock market, and fewer younger companies entering the stock market.

Since 1998, companies new and old believed that if you made a business public on the World Wide Web you could instantly become rich. This caused a rise in stock markets that year, but it also caused a rise in market capital options to this day.

Right now the M&A market is booming. A record $1.1 trillion of U.S. deals were made in just the first half of 2015. IPOs simply can’t keep up. One reason for failing IPOs is the presence of other new sources of capital, including venture capital and private-equity firms. Companies are choosing the new sources of capital and as a result, the appeal of taking the IPO route for starting companies has become less and less favorable. In addition, there are also less young starter companies. These starter companies are said to provide many jobs for American people.  

Boohoo, the stock market is shrinking. Why should anyone care and how does this impact Americans? Americans should care because it is impacting American jobs. Jobs are being generated at lower rates than they normally should. So what is the solution? Besides creating a lot more startup companies and a lot more IPOs, the solution is to cater to these younger companies and allow them to expand so that they may join the stock market. These exchanges would help the economy by giving startups access to capital that they are not getting from the current market structure.

“We have created a market structure in the United States that has really undermined our future. If you shut down your ability to start small companies, you also inhibit your ability to create large ones.” –David Weild, former vice chairman at NASDAQ who has testified in Congress about capital 

http://money.cnn.com/2015/07/09/investing/stock-market-shrinking/index.html