Chart: Value of U.S. Stocks as a Percent of GNP

I remember clipping this graphic out of the newspaper in college (I may still have it somewhere). Although it seems to me the current value is closer to previous market tops than bottoms, no? From Fortune magazine:

Comments

[Steve in TN:]

Wow, it seems we have to go from 75% down to around 40% (the '70s and '80s) to reach a bottom. I wonder if there are any other factors justifying this high a percentage?

Feb 05 08:47 AM

[ezrasfund:]

Important point with one caveat...

What percentage of all US businesses were public companies?

Feb 05 09:30 AM

[k9s-4-k8:]

Good point!


On Feb 05 09:30 AM ezrasfund wrote:

> Important point with one caveat...
>
> What percentage of all US businesses were public companies?
>

Feb 05 06:42 PM

[Moon Kil Woong:]

It makes you wonder how much the asset impairment this downturn has cost the US over all from home and property depreciation to stock and investment asset value destruction. No wonder we are all feeling quite poor even if we still have a job.

Speaking of which, I am not eager to pick up a shovel and start digging so the stimulus plan doesn't make me feel all happy inside when it touts $3-5 million new temporary street jobs. Can I invest in a public company that makes hard hats?

Feb 05 09:47 PM

[NanO49:]

Wonder what the graph will show if Congress passes a stimulus bill worth nearly a trilllion bux??

Feb 06 09:45 AM

[kotika98:]

a totally meaningless statistic, for the reasons people pointed out.

the only way to use it, is to compare the development of stockmarkets between different countries, and conclude that in one country a higher percentage of total business activity is accessible through public markets.

Feb 06 10:21 AM

[OldLimey:]

I think this chart has been doing the rounds in the context of comments from Buffett that it's time to buy - again. My own reaction is the same as StevTN above. (Of course, that could be why I'm not a billionaire. How about you, Steve??)

Feb 06 03:35 PM

[Rcsam:]

The numbers you published are incorrect. The GNP of the U.S. is $14.2 trillion in Q4,2008 according to The Bureau of Economic Analysis. The value of the U.S. Stock market was $15.64 trillion according to Atlantic Monthly in April 2007. The market is down 44.5% since then to $8.65 trillion. The ratio is 61%. Almost to the mean of the last 20 years

Feb 19 10:46 PM

[Rcsam:]

Just to verify; wiki.answers.com/Q/Wha... Wilshire Associates estimates the U.S. market value of $15.35 trillion on May 23,2007, The market is down 48.5% since then making U.S. equities worth $7.9 trillion or 55% of GNP as of Feb 19,2009. Whatever the range it is clearly in the region of the mean of the last 100 years.


On Feb 19 10:46 PM Rcsam wrote:

> The numbers you published are incorrect. The GNP of the U.S. is
> $14.2 trillion in Q4,2008 according to The Bureau of Economic Analysis.
> The value of the U.S. Stock market was $15.64 trillion according
> to Atlantic Monthly in April 2007. The market is down 44.5% since
> then to $8.65 trillion. The ratio is 61%. Almost to the mean of
> the last 20 years

Feb 19 11:25 PM

[Nimrod Bumble:]

I agree that the fortune article got the math wrong. I have it as follows. GDP = 14.2T as per BEA cited above. Wilshire 5000 index is defined as the value, in billions, of the 5000 largest stocks. Today it closed at 7302, so 7.3T. 7.3 / 14.2 = 51%. On Jan. 23rd (the endpoint of the chart which purports to be 75%), the Wilshire 5000 was at 8385. 8.385 / 14.2 =59%.

My problem is that I don't have enough wilshire data to go back and figure out what the range has been over time. If the math is consistently wrong in the chart then it wouldn't matter because we would look the same relative to the mean. But it's really hard to know what to think at this point.

Here is the description of the Wilshire 5000. www.wilshire.com/Index.../

Mar 11 02:06 AM