The following charts show the cumulative advance/decline lines of the New York Stock Exchange and the Nasdaq. Basically, each day you subtract the number of declining stocks from the number of advancing stocks on the exchange and wind up with a net positive or negative number. Add all the days together and the charts below are what you get.
Could there be a more dramatic difference in the two? ‘What causes this massive dichotomy?’ you ask. The answer, I believe, is very simple: the New York Stock Exchange simply has higher listing standards.
My guess is that many of the companies that go public on the Nasdaq do so because they don’t qualify for the NYSE. Ultimately, they have a higher failure rate hence the long-term downtrend in the chart above. The bottom line is that the average Joe should be much more leery of potential IPO “faceplants” over at that exchange.
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