A Response Article: Think Global to Avoid Shrinking U.S. Stock Market

Carlson (2017) reported in his article that the U.S. foreign investments have grown over 50% of the total global stock market. However, this total number is getting a decrease from time-to-time.

Researchers predicted that more than five thousand of public companies have declined due to regulation changes, fewer IPOs, sloppy anti-trust laws, and domination in specific industries. Because of these numbers, researchers suggested that investors should expand their investment to emerging markets. This approach is factually correct as expanding investment in diverse markets may bring some improvement, especially on valuable companies that require an enormous amount of capital to grow. The authors suggest that the increasing number of small businesses in the U.S., particularly tech startups, may increase the national and global investment as well.

Expanding investment in the emerging market has been running by other countries, albeit the U.S. still dominates the pie. China, for example, owns approximately 3% of total market capitalization. On the other hand, India only covers around 1% of the overall global market, according to Carlson (2017). While the stock market cannot be compared to the economy, the study predicted that U.S. investors have opportunities to enter the markets.Accordingly, dominating those two most prominent emerging markets could also increase the percentage of the total U.S. investment.

Additionally, U.S. investors could invest the money in startup companies that have been surge around the U.S. There are more than 28 million small businesses that were established in 2013, according to U.S. Small Business Administration. This number covered over 97% of the U.S. trade export. In order words, most small businesses in the U.S. have contributed to the US GDP.

In conclusion, diversifying investment in an emerging market is the right suggestion to help the U.S. foreign investment increase. Additionally, adding more stock on national small businesses could support the national investment in conjunction with total global U.S. investment. Therefore, adding more investment in private companies can help the companies' growth as well as expanding the equity.

---

Article & References

Carlson, Ben. (2017). Think Global to Avoid Shrinking U.S. Stock Market. Bloomberg View. Retrieved from https://www.bloomberg.com/view/articles/2017-03-17/think-global-to-avoid-shrinking-u-s-stock-market

U.S. Small Business Administration. (2016). United States Small Business Profile. Retrieved from https://www.sba.gov/sites/default/files/advocacy/United_States.pdf