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Before 2012: once a company had 500 shareholders, it was basically forced to go public and disclose everything. So fast-growing companies IPO'd early — Microsoft in 1986, Google in 2004 — and ordinary investors could buy in and ride the growth.
Even employee stock was a forcing function: option plans put shares in thousands of employees' hands, pushing companies over the 500-holder line — one of the classic reasons fast-growing companies had to IPO.
The 2012 law changed three things:
I understand that Vanguard published a 2025 report saying companies still go public at the same average age as before.
But companies like Stripe raised billions without ever listing, and SpaceX only went public in 2026 — after 24 years of growth, at a $1.77 trillion valuation.
Previous game-changer companies like Apple and Microsoft and Google and Amazon became public much earlier in their growth stage.
And index returns have always been driven by a handful of winners — that's exactly why this matters. Those few companies that make or break S&P 500 returns are now precisely the ones being kept out of the index during their steepest growth.
My question: given that the biggest growth stories no longer reach the public market until they're already mature, are simulations based on past US market returns overstating what index investors should expect going forward? By simulations I mean the standard Monte Carlo FIRE projections that assume US index returns of the last 50–100 years repeat.
where I first encountered this :
Even employee stock was a forcing function: option plans put shares in thousands of employees' hands, pushing companies over the 500-holder line — one of the classic reasons fast-growing companies had to IPO.
The 2012 law changed three things:
- Employee shares no longer count.
- The registration threshold was raised from 500 to 2,000 shareholders — and only 500 of those can be non-accredited (ordinary retail) investors, so a company can now have 2,000 wealthy shareholders and stay private.
- It became much easier to raise private money — companies can openly advertise private funding rounds to rich investors.
I understand that Vanguard published a 2025 report saying companies still go public at the same average age as before.
But companies like Stripe raised billions without ever listing, and SpaceX only went public in 2026 — after 24 years of growth, at a $1.77 trillion valuation.
Previous game-changer companies like Apple and Microsoft and Google and Amazon became public much earlier in their growth stage.
And index returns have always been driven by a handful of winners — that's exactly why this matters. Those few companies that make or break S&P 500 returns are now precisely the ones being kept out of the index during their steepest growth.
My question: given that the biggest growth stories no longer reach the public market until they're already mature, are simulations based on past US market returns overstating what index investors should expect going forward? By simulations I mean the standard Monte Carlo FIRE projections that assume US index returns of the last 50–100 years repeat.
where I first encountered this :
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