Those who believe in the burgeoning blockchain economy just received another boost for their bullishness: the stock market is shrinking. That’s according to The New York Times, not exactly what you would call an alternative news source. In fact, the Times is a publicly-traded company, so they have even more reason to desire a robust stock market.
That the traditional financial infrastructures have been declining is not news to Crush The Street readers. Several of my colleagues and I have covered the fact that participation in the stock market has dropped to worrying lows. Furthermore, demographics plays a critical role in this malaise. Younger people simply aren’t interested in mainstream finance and investment vehicles as prior generations.
The definition that the Times used, however, is an interesting one. Author Jeff Sommer writes:
When I say “shrinking,” I’m using a specific definition: the reduction in the number of publicly traded companies on exchanges in the United States. In the mid-1990s, there were more than 8,000 of them. By 2016, there were only 3,627, according to data from the Center for Research in Security Prices at the University of Chicago Booth School of Business.
Sommer explains that changing and rising demographics means that fewer people per capita have meaningful access to the stock market, which in turn exacerbates the wealth gap. Moreover, larger companies are buying out smaller ones, even in disparate industries: think Amazon and last year’s Whole Foods Market acquisition. This situation creates an untenable transparency issue.
But Why the Dramatic Change in the Stock Market?
We see the market decline’s impact. What we rarely discuss, though, is the initial catalyst. What caused this dramatic shift in the stock market?
Several reasons exist; indeed, too many to list in a one-page article. But the demographics again represents a key factor. We deplore Millennials and their self-absorbed, wayward behaviors and mannerisms, but every demo has an origination point.
The Baby Boomer generation, with their “free love” and penchant for protests, spread their rebellious seed onto the next generation (ie. younger Gen-Xers and the Millennials). From these groups, we noticed the trend of being angry without cause or justification.
As this demo grew older, they rejected mainstream institutions in a similar manner like their parents. The difference is that they’re not “selling out” like their forebearers. Rebelliousness today is almost a virtue – consider how many douchebags make millions of dollars on YouTube simply for being douchebags!
Their peers, particularly the next Generation Z crowd, have taken note. Their idea for success is not about the traditional mechanisms of attaining an education, hard work, and crafting useful skills and services. Instead, it is to further perpetuate what I term the “idiocy economy” that we see all around us.
And it’s no wonder that the stock market features fewer participating companies! How can utilitarian organizations survive when idiocy and skulduggery epitomize the new currency in this brave new world?
Certainly, the consequences are real. The wealth gap will only worsen, but it’s doing so for a completely irrational reason. Simply put, we live in a topsy-turvy society where perceived value is more important than real value.