Surging Index Funds, Fewer Publicly Traded Stocks, Computer-Dominated Trading, What’s It All Mean For Investors?
What the huge, fundamental changes in the stock market’s structure mean for investors, with seasoned market observers, Jason Trennert and Jason Zweig.
- Fund of funds Business Keeps Dying
- Baupost Letter Points To Concern Over Risk Parity, Systematic Strategies During Crisis
- AI Hedge Fund Robots Beating Their Human Masters
If you need to know everything about new iPhone X – then check our coverage – HERE.
Listen to the audio only version here:
This is not your grandmother’s or mother’s market, and if you are a baby boomer, as I am, it’s not even the market of your youth. The very structure of the stock market has changed in some fundamental ways.
The number of publicly traded stocks available to buy has shrunk dramatically. Twenty years ago there were nearly 9,000 publicly traded companies on U.S. stock exchanges. That number has declined more than 40% to just over 5,000 today.
Also, where those stocks are trading has changed. A decade ago the New York Stock Exchange , with its specialists overseeing orders for each stock, accounted for 80% of the trading of New York Stock Exchange listed stocks, transactions for all to see. Now only 20% of the trades occur on the big board. The vast majority are disbursed electronically among multiple trading platforms, out of direct human control and the public eye.
Where are new companies getting the financing to develop and grow? Largely from private investors through private equity firms. There are now more than 4,000 private equity firms globally, up from a mere 100 a couple of decades ago. 95% of them are in the U.S., and they are overseeing an estimated $2.5 trillion worth of assets.
The supply of stocks is shrinking, but the number of indexes is exploding. There are now more benchmark indexes than there are stocks, over 5,000 of them. Many of them are being created to meet the swelling demand for passive index investments, especially exchange-traded funds, or ETFs. The number of ETFs has also soared in recent years to almost 2,000 in the U.S., with about $3 trillion in assets. Four of the five most actively traded securities last year were ETFs. The one exception? Bank of America stock.
What do all of these changes mean for investors? Joining us on WEALTHTRACK this week are two financial thought leaders, one from Wall Street, and one covering it. We’ll hear from Jason Trennert, Co-Founder, Managing Partner and Chief Investment Strategist at Strategas Research Partners, an independent investment strategy and macroeconomic research firm followed by institutional investors because of its original and proprietary analysis of the markets, economy and fiscal and monetary policies. We’ll also hear from Jason Zweig, a highly respected financial journalist, who writes “The Intelligent Investor” column for The Wall Street Journal, named after Benjamin Graham’s classic, The Intelligent Investor. Zweig is the editor of the latest revised edition. He is also the author of several books including Your Money & Your Brain, and the satirical, funny and oh so sobering look at Wall Street, The Devil’s Financial Dictionary. Our discussion began with why so few companies are going public.
If you’d like to watch the show before it airs, it is available to our PREMIUM viewers on our websiteright now. Also, exclusively online, we’ll share additional EXTRA interviews with both Trennert and Zweig.
Plus, a reminder that if you would like to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACKpodcast on TuneIn, Stitcher, and SoundCloud, as well as iTunes. Find out more on the WEALTHTRACK Podcast page.
As always, thank you so much for watching. Have a great weekend and make the week ahead a profitable and productive one.
Consider Automating Some Of Your Investment Decisions
- Automatic deposits to savings or tax-deferred accounts
- Setting up a robo-account to automatically invest and rebalance your portfolio
- Buying a Target Date Fund to prepare for your retirement
- Automatic Dividend Reinvestment Plans
Trennert: Deregulation Beneficiary
Bank of America Corporation (BAC)
- Price: $23.44 on 9/6/17
- 52-week range: $14.81 – $25.80
Zweig: Family Investment
Open a Roth IRA for your children
- Take advantage of any income they have
- Can match it dollar for dollar
- No tax consequences
- Tax-free growth
Jason Trennert from the WEALTHTRACK Archives:
Jason Zweig from the WEALTHTRACK Archives:
There are two business areas where power is being increasingly concentrated in the hands of a few. They have escaped regulatory scrutiny so far but two seasoned market observers believe that is going to change. Jason Trennert is watching the companies dominating the flow of information. Jason Zweig is focusing on the index fund behemoths.