The incredible vanishing equity supply

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.

Personal cumulative acquisition of equities and mutual funds

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:

Net Capital raised 2000 to now

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:

Net Capital Raised 90s

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.

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8 Responses to The incredible vanishing equity supply

  1. John says:

    Interesting post, can you explain where you got the underlying data?

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  3. John says:

    appreciate the follow up info.

  4. Brad Reid says:

    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

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  6. Patrick Haughey says:

    awesome.

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