The table below shows the dominance of three credit-rating companies in the U.S. (source: SEC).

Percentage of U.S. Securities Ranked in 2011

As of September 2013, the MSCI Frontier Markets Index (141 companies) was valued at $123 billion, a valuation < 1/3 of Apple. Being small can have negative consequences. For example, it has been estimated that it would take > 10 days to liquidate a $100 million position in a frontier market (but just an hour to dispose of a similar position in an emerging market).

Research by finance professor Xavier Gabaix theorizes a 1-day stock market drop of 20% or more is expected to occur once every 100 years; a 15% plunge once every 50 years, and a 10-15% daily drop once every 13 years. His research uses stock market data dating back to the early 1900s.

Gabaix feels stock crashes are inevitable because very large institutional investors dominate the market. Occasionally, these investors want to get out of stocks at the same time.

Since 1896, the Dow’s average monthly return has been 0.66%; the number increases to 0.75% if you exclude September. The table below shows average monthly returns for the DJIA since 1896 and through 2012 (source: Hulbert Financial Digest).

DJIA Average Monthly Return  [1896-2012]