The incredible shrinking of US stocks -the opposite of here!

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The incredible shrinking of US stocks -the opposite of here!

Looks like we are getting to the real bottom on why US ETF's have done relatively well in recent years, vs. actively mgt. fund managers!  Rarely told but here it is:

In a WSJ article a few days ago called "Stock picking is dying because there are no more stocks to pick" by Jason Zweig.  Explains how in the past 20 years more then half the publicly traded companies have disappeared in the US.  In November of 1997 there were 7355 US stock but there are fewer then 3600 now, according to Chicago's Booth School of Biz. and other research quoted in this article.

Back in Nov. 1997, there were more than 2,500 US small stocks and nearly 4,000 micro cap stocks, yet at the end of 2016 fewer than 1,2000 small cap and just under 1,900 micro cap stocks are left.  Various factors explain the reason for this mega USA trend of reducing listed companies...(read the article).  Bottom line is, this big change handicaps stock pickers, as the article explains further "for stock pikers, differentiating among the remaining choices is an even harder game than it was when the market consisted of twice as many companions",  admits an investment strategist at Credit Suisse in NY which wrote an article called  "The incredible Shrinking universe of stocks"  By Micheal Mauboussin.  

The article states most convincingly how US Fund managers have far fewer stocks to chose from if they venture outside the index, the very area in which the best bargains might be found.  Even quoting a veteran portfolio manager with a solid long record which closed down his 400 mill US$ small stock fund and giving his investors all their money back. He says, he fired himself.  I would say thinking out-of-the box is what creates superior returns, and outside the box just got soo much smaller there.

The evaporating of thousands of stocks in the US has enduring results and could keep catching many by surprise. The population of stocks has dwindled and this is a key reason why active fund managers have a hard time keeping up or even beating the index...and so many don't.  Hence this trend may in fact last there? But its very different here.

Because on the Thai SET, its just the opposite where during this same period since the end of 1996 (I chose this date as it was just before the Asian crisis) there were 416 vs 734 listed companies presently,  or a 76% rise of listed Thai stocks trading here!  

Its "the movie in reverse" in Thailand, where the number of Thai stocks to chose from has dramatically increased -and will likely continue so...just the opposite of what's been going on in the US.  And this just at the time when institutional funds have exploded up in asset value; the very handicap which makes it so difficult to consider all these many neat smaller capitalized new choices here.

Best Regards,

Paul A. Renaud.