Why the US stock market is shrinking while private capital reaches record heights

The number of publicly listed US companies has nearly halved in two decades. Patrick Boyle examines why institutional investors are shifting toward private markets and how share buybacks and cheap debt are fundamentally altering the landscape of public equity.

Over the last twenty years, the US stock market has seen a significant decline in the number of listed companies. Simultaneously, the private capital industry—encompassing venture capital, private equity, and private debt—has surged to $7.4 trillion. This represents a fifteen-fold increase since 2000, with projections suggesting the sector could reach $13 trillion within the next four years.

Several mechanisms are driving this shift. Companies are increasingly opting to raise cheap debt rather than sell equity, a trend bolstered by historically low interest rates. Additionally, a rise in share buybacks has reduced the total volume of shares outstanding for remaining public firms. Together, these factors suggest that the world’s most liquid public equity market is losing its traditional dominance.

Source: Where Have All The Stocks Gone?