Stock-listings charts of the day

By Felix Salmon
February 3, 2011
Guan Yang sends over a couple more charts showing the total number of stocks listed on US exchanges. First there's the NYSE, Amex, and Nasdaq combined: this one goes back to 1973, and has never been lower.

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Guan Yang sends over a couple more charts showing the total number of stocks listed on US exchanges. First there’s the NYSE, Amex, and Nasdaq combined: this one goes back to 1973, and has never been lower.

SGPlot4.png

And here’s the data just for the NYSE, going back all the way to 1926:

SGPlot8.png

It’s pretty clear that the total number of stocks peaked with the dot-com bubble, and is now on a long-term secular downtrend. As a result, the stock market is increasingly failing to act as a proxy for the economy as a whole. Which is one more reason to stop obsessing whether or the stock market is up or down. That never mattered much, and it will matter even less in future.

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Comments
11 comments so far

felix – I think you have a flaw in your reasoning when you arrive at the conclusion “As a result, the stock market is increasingly failing to act as a proxy for the economy as a whole.”

the number of stocks isn’t what determines the accuracy of the “stock market” as a proxy for our economy. After all, if 5000 small businesses went public tomorrow, it would have little effect on the “stock market,” which is market cap based (assuming you mean the S&P)

Posted by KidDynamite | Report as abusive

I’ll try to come up with some measure of the fraction of total economic activity accounted for by listed companies.

Posted by guanix | Report as abusive

@Guanix – I’m thinking of total market cap vs GDP as a starting point -although astute observers complain that such a chart has the OPPOSITE problem – the market cap is warped (increased) by new, large IPOs.

Posted by KidDynamite | Report as abusive

Falling numbers of companies is more a sign of lower regulation allowing more mergers and acquisitions. However, I do agree whether stock markets are up or down is not important to the wider economy – it’s of much more interest to the non-owner executives and their enormous option payments.

Posted by FifthDecade | Report as abusive

My perception is that we saw a tech innovation boom during the 90s, naturally followed by industry consolidation. But I could easily be off base…

A third vote for not obsessing over the daily rise and fall of the stock market.

Posted by TFF | Report as abusive

This globalized world where no markets are isolated and sheltered from competition is truly winner-take-all. If you are the fourth most successful competitor in many sectors, you might as well pack your bags and go home. Or better yet join with the winner.

Posted by DanHess | Report as abusive

It’s pretty clear that the total number of stocks peaked with the dot-com bubble, and is now on a long-term secular downtrend. As a result, the stock market is increasingly failing to act as a proxy for the economy as a whole.

I think this is pretty tonto from a statistical point of view. You could have a stock market with hundreds of tech startups which was totally irrelevant to the local economy (Israel?) or a stock market with only a few dozen companies that included all the major sectors (lots of recently-socialist emerging markets). Whether or not the stock market is a proxy for the economy, and how to interpret that proxy, is just an empirical question.

Posted by dsquared | Report as abusive

“Stock market is increasingly failing to act as a proxy for the economy as a whole” – dont you need to know a) number of private companies b) historic correlation between public company performance and the economy overall c) current correlation between pubic company performance and economy d) what exactly the dependent variable is – growth, size, specific trends like unemployment etc.
Pretty generic statement, probably inaccurate…

Posted by FDum | Report as abusive

I suspect that there is an increasing amount of private equity / hedge fund activity taking possible listings off the IPO market–but this evidence doesn’t show it. What about listings on other exchanges outside of the U.S. Exchanges?

Posted by loopguy | Report as abusive

Here are some more charts: http://pages.stern.nyu.edu/~gyang/charts  /

Of course numbers from corporate financial statements don’t really match the corresponding concepts from aggregate statistics (and I couldn’t find aggregate dividends+stock repurchase numbers). Also the periods don’t line up perfectly.

Posted by guanix | Report as abusive

If it were 1990, Mr. Salmon would also conclude that the total number of stocks “is now on a long-term secular downtrend.” The years after 1990 would prove him wrong.

Posted by ElleNavorski | Report as abusive
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