Daniel's been thinking about the phrase "the market" — that shorthand we all use without really stopping to ask what it points at. He sent in a whole set of questions: where did public stock exchanges actually come from, when did publicly traded companies stop being a historical curiosity and start being the backbone of the economy, and how did we get from early trading on a bridge in Amsterdam to the enormous global equity markets we have now. But the real question — the one he wants us to sit with — is scale. How much of the corporate world does the stock market actually represent? In the U.S., what share of business activity is public versus private? How does that picture look globally? And he's especially interested in the gap between the visibility of the market and the size of the universe behind it. When we say "the market," how much are we really talking about?
This is the kind of question that sounds simple until you start pulling on it and the whole sweater unravels. I've been thinking about it all morning. The stock market is the most tracked, most reported-on, most obsessively discussed institution in the economy — and it might represent a minority of actual corporate activity. That's the tension.
It's almost a magic trick. The market is so loud, so present, so constantly updating, that it fills the entire frame. You don't notice what's outside the frame because you're not looking for it.
Right. And the frame is deliberately narrow. CNBC doesn't run a ticker for the privately held auto body shop in Des Moines even though that shop is doing real economic activity — employing people, buying equipment, generating revenue. It just doesn't have a ticker symbol.
So we're doing two things today. First, the history — how public markets went from a single Dutch trading company to a hundred and fifty-one trillion dollar global apparatus. Then the harder question: what does that hundred and fifty-one trillion actually cover, and what does it miss?
And the punchline is genuinely surprising. Most people assume the stock market is roughly the economy. It's not. It's not even close.
All right, let's start at the beginning. Where does this whole thing come from?
Sixteen-oh-two. The Dutch East India Company — the VOC. This is the first entity that looks like what we'd recognize as a publicly traded company. Permanent capital, transferable shares, and the Amsterdam Stock Exchange emerging right alongside it as the first recognizable stock exchange.
And the key mechanism here — this is the part people miss — is that the VOC wasn't just a company. It was a chartered monopoly with quasi-sovereign powers. It could wage war, negotiate treaties, coin money, administer justice. The Dutch government basically outsourced empire to a corporation and let it sell shares to fund the whole thing.
Think about how strange that is from a modern perspective. Imagine the U.S. government giving Amazon the right to maintain its own navy and sign treaties with foreign powers, and then letting anyone buy a piece of it. That was the VOC.
And people did buy. The initial share offering raised six and a half million guilders — something like a hundred million dollars in today's money — from over a thousand investors. These weren't all Amsterdam merchants, either. There were farmers, craftsmen, widows, servants. People who had never been involved in the spice trade suddenly owned a piece of it.
And that structure — permanent capital raised from the public — was new. Before the VOC, if you wanted to fund a trading voyage, you'd form a partnership for a single trip, sell the cargo when the ship came back, and dissolve. The VOC said: no, the capital stays in, the shares trade, and you get dividends. That permanence is what made the secondary market possible. If I buy a share today, I know the company still exists tomorrow.
The Amsterdam exchange itself was basically a bridge — the New Bridge, across the Damrak — where traders gathered. And they figured out short selling within a decade, which tells you something about human nature.
Within a decade! Isaac Le Maire, a former VOC director, organized a bear raid in sixteen-oh-nine, shorting VOC shares and spreading rumors to drive the price down. The company complained to the government, and the authorities banned short selling. It didn't work then either.
There's something almost comforting about that. Four hundred years of financial innovation and the basic playbook hasn't changed. Le Maire would recognize a modern short seller instantly.
He'd probably be on Twitter.
So the template is there by sixteen-ten. But here's the thing Daniel's question gets at — this was not the start of public companies as the default way of doing business. For nearly two centuries after the VOC, publicly traded corporations were rare. They were state-sanctioned exceptions, almost always monopolies, almost always created by royal charter or special act of parliament.
The Bank of England in sixteen ninety-four, the South Sea Company, the Mississippi Company in France — these were all chartered entities with exclusive privileges. The South Sea Company was literally formed to consolidate government debt, and it got a monopoly on trade with Spanish South America in return. The idea that you could just... incorporate, as a right, and sell shares to the public — that didn't exist.
And when it went wrong, it went spectacularly wrong. The South Sea Bubble in seventeen-twenty, the Mississippi Bubble the same year — both were chartered monopoly companies whose stock prices went vertical and then collapsed. After the South Sea Bubble, Britain effectively banned joint-stock companies with the Bubble Act of seventeen-twenty, which restricted incorporation for over a century.
Which is wild to think about. The government's response to a stock market bubble was to make it illegal to form the kind of company that caused it. For a hundred years. Talk about throwing the baby out with the bathwater.
But here's the thing — was it actually throwing the baby out? Because during that hundred-year period, the British economy didn't exactly stagnate. The Industrial Revolution happened during the Bubble Act era. All those mills and factories and canals — most of them were funded through partnerships and private capital, not public markets.
That's a really important point. The economy found other ways to organize itself. The public corporation wasn't necessary for the first wave of industrialization. It became necessary later, when the scale got too big for private partnerships to handle.
So when does that change? When does the public corporation become routine rather than exceptional?
The inflection point is the mid-nineteenth century. The UK passed the Joint Stock Companies Act in eighteen forty-four, and then the big one — the Joint Stock Companies Act of eighteen fifty-six — which established general incorporation with limited liability as a right, not a privilege. You filed papers, you met the requirements, you got a company. No royal charter, no special act of parliament.
And the U.S. followed a similar path, but at the state level. New York passed a general incorporation law in eighteen eleven for manufacturing companies, and by the mid-nineteenth century most states had them. The key shift — and this is the mechanism that makes everything else possible — is that incorporation stopped being a special grant from the sovereign and became an administrative procedure.
That's the legal revolution. But the economic revolution — when public markets actually became dominant — that's the late nineteenth and early twentieth centuries. The railroads are the big story here. Railroads required enormous amounts of capital — far more than any private partnership or family fortune could provide. The only way to fund them was to sell shares and bonds to the public.
The scale is hard to overstate. A single railroad line could cost tens of millions of dollars — at a time when the largest private fortunes in America were maybe ten or twenty million. No family, no partnership, no bank could fund a transcontinental railroad alone. You needed thousands of investors, and the only way to reach them was through public markets.
And it wasn't just the initial construction. Railroads needed continual investment — maintenance, expansion, new rolling stock. They were capital-hungry in a way no previous industry had been. The New York Stock Exchange basically grew up around railroad securities. By the eighteen-eighties, the NYSE was the dominant exchange in the country, and railroad stocks and bonds were the dominant securities on it.
Then the industrial trusts — Standard Oil, U.S. Steel, the big manufacturers — they went public in the wave of consolidations around the turn of the century.
U.S. Steel was the first billion-dollar corporation when it was formed in nineteen-oh-one. And it was publicly traded from day one. That's the moment when "the market" starts to become synonymous with "the economy" in the American mind. The largest, most important companies in the country were listed on exchanges, and their stock prices were reported in newspapers every day.
And then the twentieth century just accelerates everything. The nineteen-twenties boom, the crash, the New Deal regulations that created the SEC and the modern disclosure regime, the postwar expansion, the rise of the institutional investor. By the nineteen-sixties, the "stock market" is a fixture of the evening news.
The numbers are staggering when you look at the growth trajectory. The World Federation of Exchanges released their twenty twenty-five data — global equity market capitalization hit a hundred and fifty-one point nine four trillion dollars. That's an enormous number. And that was a strong growth year despite all the geopolitical instability — the Strait of Hormuz situation, the Taiwan drills, everything else going on.
A hundred and fifty-one trillion. It's almost meaningless as a number. But here's the thing — and this is where we pivot to the second half of what Daniel's asking — that number is measuring something very specific. It's the total value of all shares listed on exchanges around the world. It is not a measure of corporate activity. It's not revenues, it's not employment, it's not value added. It's what investors are willing to pay for a slice of future earnings at a given moment.
And there's another wrinkle that complicates the story. The total market cap has grown enormously, but the number of public companies in the U.S. has actually shrunk. In the late nineteen-nineties, there were over eight thousand publicly listed companies in the United States. Today, it's around four thousand. The market is bigger — much bigger — but it's also thinner. Fewer companies, each one worth more on average.
So what happened to the other four thousand?
Several things. Mergers and acquisitions took some out. Others went private. But the bigger structural shift is that companies are staying private longer — or staying private permanently. The rise of private equity and venture capital means you can raise enormous amounts of money without ever touching a public exchange. You don't need to go public to get capital anymore.
And the cost of being public has gone up. Sarbanes-Oxley after Enron, Dodd-Frank after the financial crisis, the compliance burden, the quarterly earnings pressure, the activist investors — it's expensive and unpleasant to be a public company. A lot of founders look at that and say, no thanks.
I've talked to CEOs who've taken their companies private, and they all describe the same thing — a kind of relief. No more earnings calls, no more guidance, no more analyst notes picking apart your strategy. One guy told me it felt like he'd been holding his breath for eight years and finally got to exhale.
Which brings us to the core of Daniel's question. How much of the corporate world does the stock market actually represent?
Let's do the U.S. first, because the numbers are stark. There are something like thirty million businesses in the United States — depending on how you count sole proprietorships and single-member LLCs. Of those, about four thousand are publicly listed. Four thousand out of thirty million.
That's roughly zero point zero one percent. But that's counting every lawn care business and corner deli, which isn't quite fair. A more meaningful comparison is by economic weight — revenues, profits, employment. And even there, public companies represent a surprisingly modest share.
The vast majority of U.S. corporations are privately held. Most of them are small and mid-sized businesses — the kind that form the actual fabric of the economy. The construction company, the regional grocery chain, the medical practice, the software firm with forty employees. These aren't on any exchange. They never will be.
And here's where the frame problem gets really concrete. If you live in a mid-sized American city, most of your economic life is private. The hospital where you were born — probably private or non-profit. The company your neighbor works for — probably private. The restaurant where you eat, the firm that built your house, the distributor that stocks the grocery store — all private.
And then there's the private equity universe. Some of the largest companies in America are private — Cargill, Koch Industries, Publix, Mars, Fidelity Investments. These are enormous enterprises with tens of billions in revenue, and they're not public. Koch Industries alone does over a hundred billion a year. It's been private for its entire existence.
Publix is the one that always gets me. It's one of the largest supermarket chains in the country, employee-owned, and its stock isn't traded on any exchange — employees can buy shares through an internal plan, and the price is set by an independent appraisal once a quarter. That's it. No ticker symbol, no analysts, no quarterly earnings calls with Wall Street.
The private equity firms have been buying up companies and taking them off exchanges at a remarkable clip. When a PE firm acquires a public company and takes it private, that company disappears from the market. Its revenues, its employees, its economic activity — all still there, just no longer visible through the lens of a stock ticker.
When we say "the market is up" or "the market is down," what we're really saying is: a specific subset of large, scalable, usually growth-oriented firms — heavily weighted toward tech and finance — saw their share prices move. That's not the economy. That's a window into a particular room in the economy.
The PwC Global Top One Hundred by market cap tells this story perfectly. Look at the list and it's dominated by U.S. tech and financial firms — Apple, Microsoft, Nvidia, Alphabet, Amazon, Berkshire Hathaway, the big banks. These are extraordinary companies, but they're not representative of business as a whole. They're the extreme tail of the distribution.
Here's a fun fact that really drives this home. The top ten companies in the S&P five hundred now account for something like thirty-five percent of the entire index's market cap. Ten companies. Out of five hundred. And those ten are almost all tech. So when you hear "the S&P had a great day," what you're often hearing is "Apple, Microsoft, and Nvidia had a great day."
That's the index problem. The indices are cap-weighted, which means the biggest companies dominate the movement. You can have a day where most stocks are actually down, but the S&P is up because the mega-caps rose. "The market" can tell you the opposite of what most companies are experiencing.
What public markets capture well are businesses with certain characteristics: they're large, they're scalable, they have predictable revenue streams that analysts can model, and they benefit from being visible to investors. A SaaS company with recurring revenue and high margins is a perfect public company. A family-owned manufacturing business with lumpy orders and thin margins is not.
The international picture makes this even clearer. The U.S. and the UK are actually outliers in how much they rely on public equity markets. In Germany, the Mittelstand — mid-sized, family-owned, often highly specialized manufacturing firms — dominates the economy. These companies are private, they're financed through bank relationships rather than equity markets, and they often stay in the same family for generations.
The Mittelstand is the backbone of German manufacturing, and most of it is invisible if you're just looking at stock indices. The DAX is thirty companies. Thirty. The entire German economy is not thirty companies.
There's a company called Stihl — they make chainsaws and outdoor power equipment. Global brand, thousands of employees, billions in revenue. Privately held. Founded in nineteen twenty-six, still family-owned. If you're looking at German stock indices, Stihl doesn't exist. But if you're clearing brush in Oregon, Stihl very much exists.
Then you look at China, where the picture is completely different again. State-owned enterprises represent a huge share of corporate value. Some of them are listed — PetroChina, ICBC, China Mobile — and some aren't. But even the listed ones are majority state-owned, which means the shares that actually trade represent a minority stake. The state calls the shots.
In China, "the market" is a minority interest in state-controlled entities. In Germany, "the market" is a thin slice of an economy built on private family firms. In the U.S., "the market" is a shrinking roster of large, scalable companies. None of these are the whole picture.
Then there are countries where public markets barely exist. Look at much of Africa, parts of Southeast Asia, Central Asia — the stock exchange might list a few dozen companies, mostly banks and telecoms, and the real economy operates entirely outside it. If you're a business owner in Lagos or Phnom Penh, the idea of an IPO is science fiction.
The Nigerian Stock Exchange has about a hundred and sixty listed companies. Nigeria has over two hundred million people and an enormous informal economy. The exchange captures almost none of it. The market, in that context, is basically a window into the banking sector and a handful of conglomerates.
Daniel's question — "how much of the world's corporate value is represented by publicly traded firms?" — the honest answer is: it depends enormously on where you are, but globally, it's a minority. Possibly a substantial minority by dollar value, because the largest companies in the world do tend to be listed, but a tiny, tiny fraction by number of firms.
Even by value, we have to be careful. That hundred and fifty-one trillion dollar number is market capitalization — what investors are willing to pay. It's not a measure of productive capacity or economic output. Market cap can swing by trillions on a bad inflation report. The actual factories, the actual workers, the actual goods and services — those don't change day to day the way share prices do.
There's a version of this conversation where we conclude that the stock market is a misleading indicator and we should all ignore it. That's not where I land. The market does capture something real — it's a forward-looking mechanism for pricing risk and allocating capital to the places it's most wanted. But it captures that for a specific kind of firm in a specific kind of economy.
The visibility problem cuts both ways. Because the market is so visible — because CNBC runs tickers all day and every news app has a markets section — we mistake that visibility for representativeness. We assume that what's happening to the S&P five hundred is what's happening to American business. Most of the time, it's not.
The private company down the street that just hired three people and bought a new truck — that doesn't show up in any index. Multiply that by millions, and you start to see how much of the economy operates entirely outside the frame of "the market."
Before we wrap up, Hilbert has been making faces over there for the last ten minutes. I think he has something to say about what the market actually looks like from the inside.
Hilbert: I worked for a stock promotion firm in New Jersey. Late nineties.
Of course you did.
Hilbert: Small-cap stuff. OTC Bulletin Board. My job was writing press releases and cold-calling retail brokers. "This company's got a new contract, you're gonna want to tell your clients." That kind of thing.
What kind of companies?
Hilbert: A lawn-care company. A chain of payday loan stores. A company that made novelty keychains. All of them public.
The keychain company went public.
Hilbert: They all went public. That was the business model. You'd find a company, any company, take it public on the Bulletin Board, pay yourself in stock, and then you'd promote it. The company itself didn't need to be public. It needed to be promotable.
The capital wasn't going to the business — it was going to the promoters.
Hilbert: Fees, commissions, exit liquidity for the founders. That was the whole thing. The lawn-care company raised about two million dollars and spent half of it on the IPO. They had six trucks.
What happened to them?
Hilbert: Most of them delisted within a couple years. But the keychain company's still there.
Wait. Still listed?
Hilbert: Market cap about twelve million. Hasn't turned a profit since nineteen ninety-eight. But it's still public. Files its reports, holds its annual meeting, the whole thing. I check on it sometimes.
Twenty-eight years. No profit. Still listed.
Hilbert: The market's a big place. Lot of stuff floating around in it that nobody looks at.
That's a perfect illustration of the gap we've been talking about. This company is technically part of "the market" — it's in the data, it contributes to the total market cap — but it's not doing anything economically meaningful. It's a shell moving through the motions.
There are probably hundreds of companies like that. Maybe thousands. Zombie public companies that exist because the cost of delisting is higher than the cost of staying listed. They file their reports, they hold their meetings, and they don't produce anything.
Hilbert: I had a boss named Frank who used to say the stock market was the world's greatest wealth-creation machine, and he meant it, but he meant it for guys like him. Not for the lawn-care company.
The house always wins.
Hilbert: Frank drove a Mercedes. The lawn-care guy kept his six trucks. I don't know if that's a happy ending or not.
I think it's just an ending. Neither happy nor sad. Just... what the thing actually is.
Hilbert: I should get home. My brother-in-law's visiting and he's got opinions about small-cap stocks. He lost six thousand dollars on a mining company in twenty fourteen and he still brings it up.
The open question we're left with is whether this trend continues. As private markets keep growing and public listings keep declining, does the stock market become an even narrower slice of the corporate world? Or does the pendulum swing back — maybe the regulatory burden gets lighter, maybe companies rediscover the benefits of being public?
I don't think we know yet. But the deeper implication is worth sitting with. When we say "the market is up" or "the market is down," we're really making a claim about a specific subset of large, scalable firms — mostly American, mostly in tech and finance. That has real consequences for how we understand the economy, how we make policy, how we think about risk.
The stock market is the most visible part of the corporate world. But visibility is not the same as representativeness. The next time you hear "the market," ask: which market, and whose?
This has been My Weird Prompts, with our producer Hilbert Flumington. If you enjoyed this, leave us a review wherever you listen — it helps people find the show. You can also email us at show at my weird prompts dot com.
We'll be back soon.
