Number of stocks decreasing rapidly
So I read an interesting article (https://www.msn.com/en-us/money/topstocks/stockpi…). It says there were 7,355 U.S. stocks in November 1997. Now there are fewer than 3,600. This is has made it far more difficult for active managers to find opportunity as so many firms are pursuing the same strategies & stocks, which erodes away returns.
Do you think that investors must now hold a more global mandate, maybe look into Europe/Asia/Africa? With just far less opportunity, how can investors differentiate themselves and generate alpha?
I had not heard this but thanks for sharing, quite interesting. I would have to believe most of these would be public companies either never made it public or are getting the capital they need privately. you also need to remember the 90s and 00s was the time of boiler rooms, so post crisis a lot of these companies that shouldn't have been public have never resurfaced.
as to your last question, investors should ALWAYS be globally diversified, not just now.
Interesting you point that out as to why this is the case. So there are three big reasons the article lists (which I feel are on point). Let me know what you think.
As to the reason with the 90s/00s, that is a great point. However, take a look at this chart (https://www.bloomberg.com/view/articles/2015-06-24/where-have-all-the-p…-). There are less public companies now than since as far back as 1975, by a significant margin. This is very disturbing for equity managers, and I'm not feeling too optimistic about the future of investing here. Even if money shifts away from equities, it will go elsewhere and drive down margins there, such as distressed debt, more PE, quant, etc. Not sure where the opportunity for value investing will be like for the next 2-3 decades.
When the market gets disrupted a profit loss.
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