Pull up a holdings list for any broad indexes, and you’ll see hundreds, if not thousands, of stocks listed under each one. And buying traditional indexes like the Russell 3000 or S&P 500 provides plenty of diversification benefits to investors. After all, when you hold 500+ stocks, the effects of one stock are greatly diminished.
However, that diversification is hiding a potentially sinister trend.
Despite having and holding a plethora of stocks, the markets are actually shrinking. The number of publicly traded companies continues to decrease. And while on the surface that might not seem to be a problem, the truth is, it is – especially for dividend investors. The potential number of excellent opportunities is becoming scarcer by the day.