Is the Stock Market Shrinking?

If I were to tell you the stock market is shrinking, would that surprise you or even seem absurd? Probably so, considering the record highs we’ve seen recently across the major indices.

Yet take a closer look.

The Wilshire 5000 — designed at its inception in 1974 to track as many U.S. companies as possible — swelled to over 7,500 names at its 1998 peak. Today it sits closer to 3,400. Put another way: in 1996, there were roughly 8,000 publicly listed U.S. companies; in 2024, barely half that remain. Being public carries its burdens — SarbanesOxley compliance, SEC scrutiny, relentless quarterly reporting, not to mention short sellers and corporate raiders. No wonder 86% of companies generating more than $250 million in annual revenue now choose to stay private.

_{Source 1: Blackstone. (2025). Blackstone Equity Opportunity Essentials [Unpublished educational PowerPoint presentation].}

For years, most investors didn’t pay much attention to this quiet shift. That is, until the appetite for high profile private names like Anthropic, Anduril, and the much buzzed about SpaceX began to grow — with SpaceX expected to make its long anticipated IPO debut later this year.

So, if the private world is so attractive, why would SpaceX go public at all? Well, when your valuation hits $1 trillion — making you the largest private company by a factor of three and a future member of the elite TrillionDollar Club — you eventually need the scale and liquidity only public markets can provide.

_{Source 2: Wall Street Journal, Author Jason Zweig. quote is part of an analysis on the shifting landscape of private equity and tech, particularly with SpaceX approaching a potential $1.5 trillion to $1.75 trillion valuation following its integration of AI efforts (xAI).}

Consider this: during a financing round last July, a select group of qualified purchasers got access to privatemarket shares at a $400 billion valuation. Less than a year later, that pencilout suggests a 2.5× return. Extreme? Yes. Typical? Absolutely not. But it illustrates how dramatically opportunity has shifted.

Over the past 25 years, private equity averaged annual returns of 13%, while the S&P 500 delivered roughly 10%. Three percentage points may seem modest, but in compounding terms it’s the difference between doubling your money every 5.5 years versus every 7. Run that math over your lifetime — or your heirs’ — and the results become eyeopening.

_{Source 1: Blackstone Equity Opportunity Essentials Educational Purposes Only Power Point.}

Institutions have long understood this — university endowments, foundations, and pension plans. Now, for eligible investors, access is broadening. But before we get carried away, it’s worth highlighting the drawbacks: lack of liquidity due to multiyear lockups, delayed and sometimes cumbersome tax reporting, and complexity that isn’t suitable for every portfolio. Some of these headaches vanish when held in qualified accounts like IRAs — but they still matter.

_{Source 1: Blackstone. (2025). Blackstone Equity Opportunity Essentials [Unpublished educational PowerPoint presentation].}

The truth is that the investing world isn’t shrinking — it’s evolving. What’s contracting is the old way of doing things. The next wave of innovation, growth, and wealth creation is increasingly happening behind the velvet rope of the private markets.

And slowly, that rope is being lifted.

For investors who stay curious, stay flexible, and stay informed, this shift isn’t something to fear — it’s something to harness. The tides of opportunity are rolling in, just not always where they used to.

Because markets will always move. The question is whether you’re positioned to move with them —or destined to watch the wave pass by.