Today’s chart comes courtesy of Vanguard Funds. It shows the
total value (NYSE, Nasdaq and Amex) as a percentage of GDP. Historically, the
market has run into trouble when, after a long Bull run, it penetrated the
average Market Value as a % of GDP to the upside. Mean reversion would be the
rationale for some of the bigger Bear Markets following theses spikes (shaded

Market Value of Equities as a % of GDP


Source: Vanguard

Note that after 1990, this measure completely detached from
its prior range. This implies that there may be yet more mean reversion in
equities’ near future.


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Quote of the Day:

“The things which hurt, instruct.”

-Benjamin Franklin

Category: Investing

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Chart of the Week: Market Value of Equities as a % of GDP”

  1. Andy says:

    Could it be that there are lots more multinational/international companies now trading on our exchange? This may be an apples-oranges comparison. Maybe a comparison of worldwide equities market value to world GDP might make more sense to see if we’re above average or not.

    I still think you’re right that we’re due for a strong correction, but I don’t think this particular chart adds much to your case.

  2. guerby says:

    Andy: Agreed, I made a similar remark a few days ago in another econ blog :).

  3. jzeide says:


    The link to the king of real estate random piece links to the republican rift article…is this the Fortune piece on Barrack?


  4. Chris says:

    Is it possible that more companies are publicly listed now (last 20 years) than before?