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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Quote of the Day:

“The things which hurt, instruct.”

-Benjamin Franklin

What's been said:

Discussions found on the web:
  1. Andy commented on Oct 25

    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 commented on Oct 25

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

  3. jzeide commented on Oct 25


    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 commented on Oct 26

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

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