Where’d all the stocks go? Nasdaq’s CEO on shrinking market

NEW YORK (AP) — The stock market is a much less crowded party than it used to be.

In the late 90s, when a bevy of hot dot-com companies were rushing to sell their shares on public markets, investors had more than 7,500 U.S. stocks to choose from. The dot-com bust culled many of those stocks, though, and the number has continued to shrink steadily, now down more than half from its 1998 peak.

That’s doing a disservice to the typical investor, says Adena Friedman, chief executive officer of Nasdaq, who spoke recently with The Associated Press about how it can make income inequality worse. She also touched on how trading markets are striving to open up to the world, even as politicians push for more insularity. The conversation has been edited for clarity and length.

Q: What’s behind the shrinking number of stocks?

A: Companies are taking a lot longer and waiting to go public. A big part of the reason is that there are other sources of capital that they can use to drive growth in their companies. Private capital is just incredibly abundant and readily available, and there are early-stage investors who are willing to take a lot of risk to get into these growth companies.

So they have more choice. Then the rules of the government made it possible for them to have more shareholders as a private company than they used to. They weren’t forced into the public market based on just having too many shareholders. They’re going to wait until they feel like they’re mature enough to handle the disclosure obligations and the scrutiny associated with going public.

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