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Financial Journalist Lynn: Equity Markets ‘Dying on Their Feet’

By Michelle Smith   |   Friday, 04 Jan 2013 07:59 AM

For investors, “at the start of a new year, it is worth stepping back, looking at the big picture, and asking some hard questions,” financial journalist Matthew Lynn wrote in an article for MarketWatch.

“Are equities still an invest-able asset?” is the question he says investors are now facing.

Wednesday, this year's first day of trading, stocks rallied following the fiscal cliff deal announcement.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

The Associated Press described the U.S. rally as “extraordinarily broad.” All 30 stocks that comprise the Dow Jones Industrial Average rose, as did 94 percent of the stocks in the Standard & Poor's 500. “The reverie multiplied across the globe, with stock indexes throughout Asia and Europe leaping higher,” the news provider reported.

“The trade for the year is to be long gold and equities,” Dennis Gartman of the Gartman Letter told CNBC, adding that the corporate world is in its best shape in decades and will do well if the global economic landscape is stable.

But according to Lynn, focus may need to be redirected from stock market performance to company participation in those markets.

“Just take a look at the figures,” Lynn urged. “IPOs [initial public offerings] raised just $112 billion worldwide during 2012, according to figures compiled by Bloomberg. That was the lowest level since the financial crisis of 2008. In Europe, they fell to just one third of the 2011 total, whilst in Asia they were cut in half.”

One bad year could be overlooked, but Lynn argued that there is long-term deterioration.

“Over the last decade, fewer and fewer companies have been listing their shares at all. After 10 years, that decline looks too well-established to be dismissed as mere blip,” he wrote.

“It is going to carry on,” he warned. “Equity markets, at least as we have been familiar with them for the past 50 years, are dying on their feet.”

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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