In a strange and subtle way – we have slowly but surely, had fewer public stocks available.
A preview of our coming Newsletter Article …
Where did all the stocks go?
Economics 101 says if we have the same demand and less supply, price will rise-
We were surprised to find out the total US stock headcount is down by almost 50% over the last two decades….
Key findings and reasons-
- According to many, the costs have risen dramatically to nearly mid-teens percentage of total public offering
- Continued initial public offering “Pops” – think SNAP – only to fizzle much below initial offering price
- Increase demands from governance once public
- Mergers – big public companies getting bigger through acquisition
- Public company Buybacks – While an entire article could be written on this subject, in brief buybacks lower the total shares outstanding of a company are an appealing use of extra capital as a buyback increases reported earnings all other items considered AND are more flexible than a dividend. Lowering the dividend is very politically incorrect as it may lead investors to believe there is company weakness, with little to no similar mandates on buybacks.
- Less flexibility being a public company – this especially true from home grown or family run companies
- Adequate access to capital – in recent years capital from various sources such as debt offerings or venture investors has made it less necessary to go public, once a mandate for liquidity
So if there are less supply and at least similar demand — valuations may be increased!
Look for complete analysis in our Q 3 Newsletter.
Have a Great “Less Supply- Higher Price” Day!
John A. Kvale CFA, CFP
Are your eyes glazed over yet? It’s ok, we will be digging deeper into this throughout the year ….
quarters coming Newsletter as it has been updated and we have over a year of usage under our belt. The premium version has paid for itself in cost and convenience MANY times over… worth the re-review …
town. With over 1000 juniors not including parents and siblings, caravanning to the small town, hotels and evening dining spots are at a premium….
Your Guide to how much Tariff talk should Matter – World Exports in One Chart
Thanks to our friends at howmuch.net, an absolute timely chart on the total goods and services moving around the world.
We find this interesting given the rhetoric being bantered around in the headlines and giving capital markets an excuse to frown!
Take a moment to see rhetoric versus total exports/trade-
Have a Great “Total Value Export Informed” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
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Posted in Investing/Financial Planning, Market Comments, Political
Tagged Political, Tariff, World Export