We are marking MarketWatch’s 25th anniversary by looking at the 25 biggest financial market events and developments we have covered. In our previous installments, we noted the first 15 events MarketWatch reported on that made a big impact on financial markets. They included the rise of online brokers, the IPO boom and bust, the financial crisis and the rise of China.
Over the last decade, important new forces emerged that have impacted global markets in profound ways. Some of these developments would have seemed far-fetched when MarketWatch first started writing about money and investing.
16. The U.S. shale boom
An industrial fracking oil well.
In September 2013, as the U.S. started producing more oil than it imported, a MarketWatch headline declared that “U.S. oil independence isn’t just a dream.” A veteran energy trader told MarketWatch at the time that “the U.S. oil boom is only in the second inning.”
During MarketWatch’s lifespan, the U.S. transformed from a net importer of oil to an exporter, producing as much as 13 million barrels a day. The national security implications were profound and the extra production kept oil prices lower, fueling the economy and the stock market.
It was a development that few saw coming. For more than three decades, oil production in the U.S. had declined. By 2006, the 5 million barrels of oil America produced each day was nowhere near what the country needed, and the country imported more than 10 million barrels per day.
But in areas of Texas, Oklahoma and North Dakota, a group of American wildcatters started using new techniques like hydraulic fracturing and horizontal drilling to tap oil trapped in reservoir rock that seemed impossible to extract. Many big oil company executives laughed at these entrepreneurs. But as they refined their approach and oil prices rose, shale oil drilling became economical. With interest rates low, Wall Street was enticed to finance the small independent oil companies and a new industry thrived.
U.S. oil production started to increase around 2009. The stocks of shale oil companies soared on Wall Street, until a Saudi-led OPEC kept pumping oil in an attempt to kill the U.S. shale phenomenon. As oil prices fell starting in 2014, U.S. shale producers were humbled. They were no longer stock market darlings and some even filed for bankruptcy. But the U.S. shale industry endured and in 2022 the federal government projected the U.S. would produce 12 million barrels of oil daily.
17. The era of passive investing
John C. “Jack” Bogle, the late founder of the mutual fund company Vanguard Group.
Jack Bogle created the first index fund in 1975, introducing an ultra-cheap way of getting broad access to the stock market through the Vanguard Group. The idea was to approximate the performance of the market instead of trying to beat it.
Over the following decades, the idea gradually became more popular with investors, who gave up trying to successfully pick active fund managers. In 2013, the shift toward so-called passive investing started to significantly accelerate, as passive’s share of U.S. fund assets began to increase 2.3 percentage points a year as new money flowed into these strategies and away from active funds.
The rise of passive investing was further accelerated by exchange traded funds, which began at State Street in the early 1990s and got a boost when BlackRock purchased the iShares brand. Similar to mutual funds but traded like stocks, investors could buy passively managed ETFs targeting different stock sizes, sectors, investment styles and geographies, as well as commodities and themes such as crypto, clean energy and innovation. State Street
and Vanguard Group became the industry’s heavy-weights.
As a result, the structure of markets changed dramatically, shifting the way equity markets functioned and altering the fee-driven power structure of Wall Street. Today, passively managed index funds exceed $20 trillion and own more of the U.S. stock market than active funds.
18. Unicorns and the rise of private markets
In 2013, venture investor Aileen Lee coined the term “unicorn” to describe recently started private technology companies valued at $1 billion or more. Private market investing exploded and hundreds of new companies were able to raise massive funding rounds to finance their growth for years without tapping the public markets. Elon Musk’s SpaceX raised $1.5 billion in May 2022, for example, valuing the company at $125 billion. Payment company Stripe was valued at $95 billion while still a private company.
“I typically hear folks refer to greater than $10 billion unicorns as ‘unicorns,’ ‘decacorns’ or ‘dragons’,” a confused Silicon Valley lawyer told MarketWatch. “I have also heard folks refer to ‘super unicorns’, sometimes greater than $100 billion or sometimes [larger than] some other big threshold.”
With interest rates low, private equity also boomed its way to being a $6 trillion industry and some of the nation’s biggest companies were taken private. The public markets shrunk. “We need to study this public market diminishment thoughtfully and deeply,” Jamie Dimon, chief of JPMorgan Chase & Co.
wrote in his 2022 letter to shareholders.
When MarketWatch was founded, there were about 7,000 U.S. public companies, but by 2022 that number had tumbled to 4,800. Meanwhile, the number of U.S. companies backed by private equity firms grew from 1,600 to 10,100. Blackstone
a private equity firm, became more valuable than Goldman Sachs
the quintessential Wall Street bank known for selling services and trading around publicly traded companies.
“LBO is the new (and better) IPO,” tweeted private equity billionaire Orlando Bravo, contrasting the leveraged buyouts of his industry with initial public offerings that traditionally list private companies on the stock market.
19. Golden age of activists and the buyback boom
Carl Icahn, chairman of Icahn Enterprises
Neilson Barnard/Getty Images
Hedge funds that purchase minority positions in public companies and demand big strategic changes became a common feature of the markets. Their influence was widely felt. Paul Singer’s Elliott Management grew to be a $50 billion hedge fund and its activist work extended to whole countries, buying the bonds of Argentina and forcing it to make payments on its defaulted debt. Billionaire hedge fund investor Dan Loeb pushed Scott Thompson out of the CEO position at Yahoo and replaced him with Marissa Mayer. Sometimes, the activists made spectacles of themselves, culminating in a live television screaming match between billionaire activist investors Carl Icahn and Bill Ackman.
But more often than not, the activists simply agitated for public companies to return capital to shareholders, often in the form of share repurchases. Corporate America got the message and boards authorized unprecedented levels of stock buybacks, more than $800 billion annually. CEOs got into the habit of buying back boatloads of their stock.
Some politicians, like Massachusetts Senator Elizabeth Warren, decried stock buybacks as “paper manipulation” meant to boost executive pay and called for the money to instead be reinvested in American businesses. But Washington was not able to slow down the corporate stock buyback machine.
AFP via Getty Images
ESG, or environmental, social and governance, investing was introduced in a market paper called “Who Cares Wins” and aimed to channel investment toward conscientious disruptors or established firms changing the way they do business. The bets included makers of lithium batteries for electric vehicles (the “E”), companies that recruit from HBCUs (the “S”), or those that link CEO compensation more closely to certain metrics, including environmental performance (the “G”).
Starting around 2014, research started to get published supporting the idea that ESG, or sustainable investing as it’s sometimes called, doesn’t have to come at the expense of profit. ESG investors argued they were buying stocks of companies solving problems for the future: preparing natural gas pipelines to pump green hydrogen or bringing younger and more diverse thinking to corporate boards. By one measure, companies within the top 30th percentile on “Culture & Values” in the S&P 500 traded at a premium to companies in the bottom 30th percentile, said the S&P Drucker Institute. Major public pensions in New York and California embraced ESG themes.
Today, ESG investing is estimated at over $20 trillion in assets under management (AUM), or around a quarter of all professionally managed assets globally. That number includes individual stocks, bonds, mutual funds and exchange-traded funds (ETFs). ESG assets are on track to exceed $50 trillion by 2025, representing more than a third of the projected $140.5 trillion in total global assets under management, according to Bloomberg Intelligence.