Posts filed under “Investing”

Chart of the Week: Market Value of Equities as a % of GDP

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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