Figure 1: Personal and mutual fund cumulative acquisition of corporate equities
In the jilted age of cynicism towards our institutions, the enormous success of capitalism over the past 60 years can be summed into the above chart. It represents the cumulative effect of households systematically investing in equities, and then selling them at higher prices.
Figure 2: Personal cumulative acquisition of equities and mutual funds
Secondary to this story is the continual shift away from direct equity ownership into mutual funds.
What is most striking, however, is the fact that the non-financial corporate sector has operated almost entirely without outside capital for the past decade:
Figure 3: Cumulative Net Capital raised 2000 to now
Contrast this the 90s, where equity issuance went negative in the latter half, but companies still raised capital on the credit markets:
Figure 4: Cumulative Net Capital Raised 90s
You haven’t spent much time on the finance blogosphere if you haven’t seen the conspiracy theories surrounded evaporating trading volumes. The simple fact is that companies have contracted equity supply.
Moreover, the need for outside capital has nearly vanished.
Interesting post, can you explain where you got the underlying data?
Z.1.
http://www.federalreserve.gov/releases/z1/current/Coded/
http://www.federalreserve.gov/releases/z1/current/data.htm
Relevant codes: FA153064105 FA153064205 FA653064100 FA104102005 FA103164103 FA104104005
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appreciate the follow up info.
Part of it, I suppose, has to do with incredibly cheap interest rates . . . making accessing new capital from bond/credit markets much more desirable than the issuance of new shares. Excellent work on your part digging this all out and charting it for your readers. Brad Reid
So what do you think the reason is? Could be household saving rates?
http://www.cesifo-group.de/ifoHome/facts/DICE/Other-Topics/Basic-Country-Characteristics/Gross-Domestic-Product-and-its-Components/Housh-sav-rat-12/fileBinary/Housh-sav-rat-12.xls
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awesome.