Tuesday, February 15, 2011

The Incredible Shrinking Stock Market

Do you sometimes feel as if you don't have a sufficient menu of choices as to where to invest your money? That may be because the number of public companies in America has been declining for a long time now. The number of companies listed on the various American stock exchanges peaked at over 7,000 in 1997. But it's been falling ever since, and is now down to around 4,000.

Why is that? There's always a certain amount of natural turnover in the markets, as corporations go out of business or merge with each other. The 1990s had a lot of publicly held firms that aren't around any more - that 1997 figure would include such Internet supernovas as Netscape and Broadcast.com, and plenty of other once-hot stocks that have now disappeared.

And in the new high-tech landscape, the IPO is not the status symbol it once was. Many of today's biggest Internet successes, such as Facebook and Twitter, have preferred to remain privately held even as their valuations climb into the billions. And as long as that's the case, Americans investing options will remain somewhat limited.

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