End of stocks

An excellent oped in the NYTimes today by Felix Salmon of Reuters makes the point that public stock markets are becoming increasingly irrelevant. Young companies don’t need them – see Facebook and Twitter – established companies don’t need them for capital-raising – see Apple’s vast pile of cash – and the consolidation between exchanges is more about acquiring profitable derivatives trading operations. So why are so many ordinary investors still being encouraged to invest in publicly listed stocks?

It’s also worth noting the effect of ETF trading in vastly increasing the volatility of stock prices – making life miserable for the managers of companies whose stocks end up in these ETF indices and dissuading companies from going public.

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