Posthaste: The world’s biggest stock market is ‘geriatric.’ Should we be worried?

Article content

Article content

Article content

Article content

According to Owen Lamont, economist at Acadian Asset Management, the age of the U.S. equity market by some measures is nearing all-time highs.

Article content

Markets, like human populations, age because of a lack of new entrants. In humans, it’s babies; in markets, it’s initial public offerings.

Article content

Article content

The number of IPOs have been dropping in U.S. markets since 2000, and as a result, the founding and listing ages of companies have climbed, said Lamont.

Article content

Article content

Microsoft Corp., for example — founded in 1975, listed in 1986 — is representative of the cap-weighted U.S. market, both in its listing age and founding age at IPO.

Article content

Another measurement of the age of a market is new issue weight, which is the per cent of the stock market’s total capitalization that has a listing age of less than three years.

Article content

When the new issue weight rises it means the market is getting younger as new entrants come in or recent entrants outperform the market.

Article content

As of November 2025, the market’s new issue weight was 1.3 per cent — far below the historical average of 4.6 per cent as relatively few firms went public over the past three years, and those that did had low valuations.

Article content

Lamont said the drop in the new issue weight in such a short time is striking, even considering the rising role of private markets.

Article content

“It’s not just that we don’t have a new issue wave; what we have is an epic new issue drought,” he said.

Article content

So should we be worried? Is the aging market a sign of approaching decrepitude?

Article content

Article content

“Should you dump U.S. stocks and shop around for a younger market? No,” wrote Lamont.

Article content

Article content

“Rising age may be undesirable for human populations, but for equity markets, lack of young firms indicates high future returns. Based only on its age, today’s geriatric market is a screaming buy.”

Article content

Lamont’s analysis between 1929 and 2001 found that when the market is overweight in new listings, returns are low.

Article content

“Markets with many young firms tend to be overvalued, because private firms rush to go public to take advantage of high equity prices,” he said.

Article content

Some examples of new issue waves that did not go well for investors are the rush to market in 1929-30 that peaked at a new issue weight of 14 per cent; the giant wave during the tech bubble that rose to over 12 per cent in 2000; and a smaller surge in 2021, which was “a bad time to buy stocks,” said Lamont.

Article content

Conversely, the only years in U.S. history with lower new issue weights than today are 1934 and 1976 to 1978, “times when the U.S. stock market was dirt cheap,” he said.

Article content

One explanation for the dearth of new listings is that the growth of private markets has caused firms to stay private longer, and Lamont concedes this may make new issue weights less of a reliable predictor. Because let’s face it, unlike in the 1970s, the market currently does not look cheap.