Wall Street plans to throw retail under the bus for market volatility – including the earthquake ahead.
Eat your ETFs
Since 2003, ETFs have increased almost 18 fold (from about 120 to 2200). That of course means more companies are being tied to variables other than performance to determine stock price.
Upside Chronicles wanted to compare that to the number of domestic companies listed on the market to try and figure out an “average” number of ETFs a stock is in – a new volatility metric. The more things are tied together, the more volatility we should expect.
It was surprisingly hard to find how many US companies are listed on the public market by year. In order to get that figure, Upside had to hunt and pull from numerous sources – especially for more recent years.
No news is bad news
The United States used to report how many domestic companies were listed on the public market to the World Bank. But they stopped in 2018.
But why’d we stop reporting such a basic piece of information?
Because it was bad news. The number of companies listed on the stock market has been in a steady decline for the better part of 20 years. In 2003, there were about 5200 domestic companies on the market. Today, it’s just under 3000.
Interestingly, mass media stopped reporting on this alarming decline. Upside Chronicles found an interesting article on this topic from the Wall Street Journal titled: “Where have all the public companies gone?”- from 2017. There has been some better coverage of the matter on foreign pubs like the Financial Times, but it’s still pretty limited, certainly not nearly enough.
Is it a coincidence that the U.S. stopped reporting this information to the World Bank right around the same time coverage of this matter by U.S. media outlets ended?
American economy in free fall
Probably not – and there’s a reason for the end of this coverage.
The situation took a major dive. We were losing a maybe 100, 200 companies a year on the steady decline, but between 2018 and 2019, we lost about 900. The news was so bad we didn’t even want to tell the World Bank.
The financial media didn’t bother to cover it because they’re funded to push a narrative onto the masses. It’s why they exist – it’s who pays the bills. It’s why we need to pick a media source and collectively pay their bills, or all we’ll get is the “news” someone else paid for us to get.
ETFs are the new CDOs
So what they did to offset the fact that they had cannibalized the American economy was create more and more ETFs. They needed fluff. ETFs are the stock market’s CDOs.
Could this be the real impetus behind the SPAC wave we had in recent years? Fewer companies have gone public and put their companies in the trash compacter that is the American stock market. Private companies are catching onto this value-stealing game and staying private for longer. It also explains the drastic rise in private equity – they had to go hunting.
Wouldn’t you know it – the exponential rise in SPACs began right about the same time we stopped reporting how many domestic companies were on the US stock market. Needed more lambs to slaughter.
How convenient, then, that the media hasn’t been reporting on the fact that the pool of public American companies is shrinking. Because now, as companies are increasingly grouped in ETFs, which by extension creates volatility, they’ll blame it on UnSoPhIsTiCaTeD rEtAiL tRaDeRs, despite the fact that this trend has been decades in the making. Perhaps after the 2018 drop, they realized their parasitic ways were going to kill the host. It was time to loot n’ boot.
It doesn’t take a financial degree to know that fewer companies means bigger wealth disparities.
Now, we see a very concerted effort to blame the whole situation on Wall Street’s favorite scapegoat: Retail investors. That is why we often here about GameStop and AMC positioned as the baseless whims of people who don’t know what they’re doing, rather than a calculated play that fights off predatory Wall Street firms from stealing any remaining value from struggling American companies like a school of piranhas.
Because when all else fails, Wall Street will use its many resources to shift the blame of disasters decades in the making and visible for miles away onto people who had absolutely nothing to do with this: hardworking, everyday Americans.
Why wouldn’t they?