Chart Store week continues at the Big Picture. Today’s TCS graph is the NYSE Market Capitalization, shown over time as a percentage of US GDP:
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click for larger graphic
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Money is power, & you ought to be reasonably ambitious to have it." —Russell H. Conwell, Temple Univ, 1877
"It's the end of the world as we know it and I feel fine" say the French as consumer confidence in May rose to the highest since Nov '10 as they welcome and get excited about new Pres Hollande. Also, the French 10 yr bond yield touched the lowest on record this morning. June consumer confidence in Germany held at 5.7, just .2 pts off the highest since Mar '11. To the euro bond debate which is now taking on greater rhetoric with those with high bond yields wanting them and those with low ones saying no way, ECB member...
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February 23rd, 2011 at 11:47 am
True, but many of the companies that make up the NYSE are more global than they were prior to 1996 so comparing the ratio of NYSE market capitalization to US GDP should be expected to grow modestly. However, none of the market movements don’t seem anything but modest, so I agree with you.
February 23rd, 2011 at 11:54 am
Also, the percentage of the population that owns stocks has risen from 10% to 70% (or something close to that). I want to like this statistic, but can’t.
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BR: Yes, but they own a mere pittance — the median US family equity exposure was under $33k.
The big boys own most of the real assets, especially including stocks
February 23rd, 2011 at 12:12 pm
What percentage of China’s GDP needs to be added to make sense of this data?
What date did NAFTA take effect?
February 23rd, 2011 at 12:21 pm
Barn- That’s irrelevant. Think about what you just wrote in the context of what gdp is.
February 23rd, 2011 at 12:22 pm
Can’t wait for this bs to end and for us to break that dotted line. Hopefully we do it quickly and end the charade.
“Wealth effect” my assssssss.
February 23rd, 2011 at 12:56 pm
Here’s an interesting chart that helps make sense of the “missing” GDP.
http://current.com/news/92986840_the-giant-sucking-sound-ross-perot-warned-us-about-in-chart-form.htm?xid=RSSfeed
February 23rd, 2011 at 2:24 pm
With regard to stock values and GDP. Remember the wise words of Andy Xie:
”Indeed, most people who invest in the stock market get poorer. Look at Japan, Korea and Taiwan: Even though their per capita incomes have risen enormously over the past three decades, investors in these stock markets lost money. Economic growth is a necessary but not sufficient condition for investors to make money in the stock market. Most countries, unfortunately, don’t possess the conditions for stock markets to reflect economic growth. The key is good corporate governance. It requires rule of law and good morality. Neither is apparent in most markets.”
http://english.caijing.com.cn/2009-06-09/110180019.html
February 23rd, 2011 at 2:34 pm
Wouldn’t an enterprise approach be more relevant than an equity value approach in doing this comparison over time? A company can finance itself using some combination of debt and equity. I suspect that companies prior to the 90s were more highly levered overall than the average company today, since low-leverage tech companies comprise a higher proportion of the market. So the split in enterprise value today would favor equity, creating a higher overall equity value relative to GDP.
February 23rd, 2011 at 3:02 pm
@super-anon
Do we understand you correctly that since good corporate governance, rule of law and good morality are in short supply in the US we should expect, like the Japanese, to see the our indexes down 80% (that would be S&P 300) at some point?
February 23rd, 2011 at 4:02 pm
Looks like Herr von Bernankenstein truly is hoping that when it comes to asset-price bubbles, the third time is the charm. The funny thing, after successive stock-market and RE bubbles, the FedHeads couldn’t even come up with a novel asset to bubble-ize.
“Well, we haven’t done stocks since 2000, so let’s do that again, just spread it among the indices a little more, put lipstick on it and keep repeating, ‘this time is different’.”
Superposing a plot of “Number in Workforce” on this also makes for a nice perspective on the likelihood of durability of the present “recovery”. Castles built on the sands of ever-increasing borrowing…
February 23rd, 2011 at 7:42 pm
How about making the same adjustments to the NYSE market cap as discussed in the Lowry’s piece?
February 23rd, 2011 at 10:34 pm
Are you all the same posters who said the same things about the same chart, TWO years ago? Back then, one of them had some profane words to say about AAPL’s price. Hehe…wonder if he missed the whole move?
Have you?
jr
February 23rd, 2011 at 11:00 pm
jreacher, be careful you will hit a nerve with some of the nay-sayers!
yes, we can tell who missed the big moves…sounds like MayorQuimby missed the fastest double in recorded history…
here is a lesson for some of you more opinionated fellow bloggers…
stop trying to force your incorrect conclusions on the market, because it doesn’t mater what you think, only what the market does, some of you are trying so hard to be “right”, but the only thing that matters is to be on the right side of the market
the market is never wrong, so stop trying to fight it
February 24th, 2011 at 1:06 am
jreacher, macrotrader603,
Are you the same posters who said the same about the stock market in 2000 and 2007 and who felt all superior toward “the nay-sayers” in the same way back then as you do now? The memory of the ones who believe that the market was “never wrong” is apparently very short.