The Shrinking Stock Market

Everyone knows about the stock market—it's a place where companies can raise money by selling shares of ownership to investors. Usually, during the summer months, the market is typically calm, and stocks tend to underperform. However, lately, fewer companies are choosing to go public, causing investors to pull their money out.

There's a famous saying some investors follow as summer approaches: “Sell in May and go away.” This phrase suggests that investors generally sell their stocks during the summer months when returns are moderate, go on vacation, and reinvest in the fall. However, this summer, investors seem to have spotted a new pattern, noticing fewer companies going public. “At [the stock market’s] peak in 1996, there were 7,300 publicly traded companies in the U.S. Today, there are about 4,300” (CNN). With most companies choosing to stay private, there are fewer and fewer options available for investors. This could potentially make it harder for investors to find good stocks to invest in. However, it also means there could be more opportunities in private markets—if one has access to them. Private companies have more control over their actions and can make decisions without worrying about outside pressures. Because of this, many large companies have chosen to stay private, causing “a net reduction of $120 billion in public equities this year… a figure that dwarfs last year's $40 billion decrease and marks the third consecutive year of decline” (World Economic Forum). This data suggests consistent uncertainty among many companies as more pull out of the market each year.

What does this mean for us? The stock market is constantly changing, with new trends and patterns emerging each month. It’s essential to do your research and consider your goals because everyone's investing journey is different. Stay up to date with stock market trends, and research a company's background and history before deciding to invest in it. Remember, investing for the long term is a smart approach, no matter what the market throws your way.