"They're not Making Any More Stocks!"

USA TODAY reports that private equity is shrinking the pool of available stocks on the market:

Wave of buyouts shrinks public pool of stocks

Investors might not realize it, but private equity's public-company pig fest is leaving them with fewer choices when it comes to U.S. stocks...

Meanwhile, 107 U.S.-based companies have issued stock in initial public offerings. That leaves the market with a net loss of 110 stocks, Capital IQ says.

The shrinkage is noticeable. There aren't 5,000 stocks anymore in the Dow Jones Wilshire 5000...

And it's not just small companies going away. This year, 12 members of the S&P 500, a benchmark index of large-company stocks, have been taken out by private buyouts and acquisitions, says Howard Silverblatt of S&P. An additional 17, including Bausch & Lomb, will disappear once their buyouts are completed, he says.

"Buy now or get priced out forever!"


Sound familiar?

It should. This is they same sort of thinking that lead to a glut of overpriced housing in the U.S., with predictable results:

U.S. Median Home Price Tumbles to 2-Year Low in Slump

U.S. home prices tumbled to a two-year low in the first quarter, with declines in almost half of U.S. cities, the National Association of Realtors said.

The median price for houses and condominiums slid 1.8 percent to $212,300 in the first three months of this year, the lowest since the first quarter of 2005 when it was $199,700, the Chicago- based real estate trade group said.

The recent action in the U.S. stock market smells suspiciously like (yet) another buying panic.

But if buyers keep falling for the same routine over and over again, why stop now? Wall Street and hair-trigger speculators certainly have no reason to do so (pro-tip: if you think you're a hair-trigger speculator but don't have a team of PhDs working for you, you're probably not a hair-trigger speculator).

Long-term investors scrabbling to pick up those last few stocks before they're plucked off the market by private equity firms, on the other hand, might consider some basic economic principles first. Namely, that increasing demand and prices will have the same effect on the stock market as they do on any other market:

(Here comes the supply...)

First-quarter IPO proceeds hit seven-year, Q1 high

Initial public offerings in the United States turned in the strongest first quarter in seven years, according to a survey by PricewaterhouseCoopers. In the three months ended March 31, 64 IPOs raised $12.1 billion, up from 54 IPOs that raised $11.6 billion in the year-ago period. Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers' Transaction Services group, cited strength in financial services and technology sectors, with financial sponsors continuing "to be a major factor in the market, backing 40% of all IPOs and raising 55% of proceeds."

"Stock prices never go down! (Well, OK they do, but they always come right back up.)"