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How Reforming Stock Market Rules Would Dramatically Boost America’s Middle Class

Just imagine how much it would help the middle class to enjoy access to America’s wealth engines again.

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Americans are highly aware that our middle class is failing to keep up economically. Everything is getting more expensive, and wage growth simply hasn’t kept pace. One major area is often overlooked as a possible contributor: the stock market or, more directly, how companies use it today in comparison to the recent past. 

When I started my career in finance in the early 1990s, the stock market was the place most emerging companies went for growth capital. This allowed individual Americans to participate in the wealth creation of successful homegrown companies. I cannot tell you how many kids were put through college because of the growth of Home Depot or Waste Management stock, or too many other companies to count.  There were several stock launches, or IPOs, a week, and an investor usually had a good chance of getting an allocation if he asked. 

It’s astonishing to think about now, but if you reinvested the dividends, a $5,000 investment into Home Depot on its IPO would be worth $96,000,000 now. The same $5,000 invested into Facebook, however, would be worth $75,000.

The difference is that Facebook’s parabolic growth was enjoyed by private equity firms, not the public. This is even more confounding when you consider that the current market cap of Home Depot is $320 billion, and Facebook is a $1.4 trillion company.........

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