Quarterly NEWSLETTER APRIL 2017 IntegratedWealth Management Since 1987 C A R L S O N C A P I TA L M A N AG E M E N T ADAM HOFFMANN, CFP®, DIRECTOR OF INVESTMENTS & RESEARCH TRIVIA TIME: how many stocks make up the Wilshire 5000 Total Market Index (a widely used benchmark for the U.S. equity market)? While the logical guess might be 5,000, the reality is that as of December 31, 2016, the index actually included around 3,600 companies. In fact, the last time this index contained 5,000 or more companies was at the end of 2005.1 Surprisingly to most, this reduction in investable companies is nothing new. Over the past two decades, there has been a steep decline in the number of U.S.-listed, publicly traded companies.With this information in mind, some natural questions may arise. Questions such as: should investors in public markets be worried about this change? And, does this reduction mean that it is more difficult to achieve a truly diversified stock portfolio? Fortunately, the answer to these questions is no. In fact, when viewed through a total world lens, a very different story begins to emerge. While it is true that in the U.S. there are fewer publicly listed firms today than there were in the mid-1990s (a decrease of about 2,500), there is no consensus about why listings have decreased over this period of time.As with many unsolved questions, a number of academic studies have explored possible reasons for this change. One line of investigation considered if changes in the regulatory environment for listed companies in the U.S. relative to other countries may explain why there are fewer listed firms.Another examined whether the change has been driven by the possibility that small private companies have been acquired more often by larger established firms already listed on the exchanges, rather than go through the IPO process themselves. Regardless of the reason why it’s happening, the good news to investors is that it’s not actually limiting their ability to gain access to a diversified stock portfolio.The number of firms listed on all global equity market exchanges — U.S., non-U.S. developed, and emerging markets — has increased from about 23,000 in 1995 to 33,000 at the end of 2016, as illustrated in the chart at the top of page 2.As you can see in the chart, it is clear that the increase in listings both in international developed markets and in emerging markets has more than offset the decline in U.S. listings — that is, the number of publicly listed companies around the world has increased, not decreased. FIRST QUARTER RETURNS page 3 TAX PLANNING FOR 2017 page 4 PLANNING FEATURE: LIFESTYLE INFLATION page 5 THE FIDUCIARY RULE AND HOW IT RELATES TO CCM page 6 CCM WELCOMES PAIGE WOODS, CPA ANNUAL PRIVACY POLICY AND FORM ADV page 7 CCM NEWS BRIEFS page 8 INVESTMENT INSIGHT Continued on page 2 1 https://wilshire.com/indexinfo/Wilshire-5000-Total-Market-Index.html