Dimensional Fund Advisors: Going Global Is Still in Vogue
Hereâs a trick question: When does 5,000 = 3,600? The answer is: when youâre counting how many companies the Wilshire 5000 Total Market Index is actually tracking these days. The name suggests there are at least 5,000 publicly traded, U.S.-listed companies in the total market, but that number has been shrinking for a couple decades.
Thatâs one of several fascinating insights shared in a recent report from our friends at Dimensional Fund Advisors: âGoing Global: A Look at Public Listings.â The report also notes that, while the number of U.S. publicly traded companies has dropped since 1995, two other trends have taken place during the same 20 years:
- The market cap for U.S. publicly traded companies has increased â up from about 40% of the marketâs capital in 1995 to 50-55% today. I take that to mean there are fewer fish in the U.S. sea, but theyâre bigger catches.
- The number of publicly traded companies worldwide also has increased by about 10,000 firms.
Sheriâs Take: What should we make of this information? I agree with Dimensionalâs conclusion (and have said as much in several past posts, such as here and here):
âWhile there has been a decline in the number of US-listed, publicly traded companies, this decline has been more than offset by an increase in listings in non-US markets. While the reasons behind this trend are not clear, the implications for investors today are clearerâto build a well-diversified portfolio, an investor has to look beyond any single countryâs stock market and take a global approach.â
For more âgo globalâ insights, check out Dimensionalâs new report.
SAGE Serendipity: Richard Simmons, the 70’s fitness guru, had been active for 40 years, but in February 2014 he dropped  from the public eye.  Dan Taberski, who met Simmons while taking a class at his Slimmons exercise studio in LA, has one of the country’s top rated podcasts — Missing Richard Simmons. Katie Couric interviewed Taberski about his motivation on Yahoo News âMissing Richard Simmonsâ: the story behind the countryâs number one podcast. Here’s a link to his podcast. Like him, it’s appropriately wacky yet very endearing.