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U.S. Stock Market Is Biggest & Most Expensive In World, But U.S. Economy Is Not The Most Productive


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By Ron Surz Ron@PPCA-Inc.com; Originator of Age Sage

  • The U.S. stock market is about 43% of the world stock market; not too long ago it was 50%
  • The U.S. stock market is currently the most expensive in the world with a CAPE (cyclically adjusted Price-Earnings) Ratio of 30
  • China has surpassed the U.S. as the most productive economy in the world

The Biggest Stock Market

As comes as no surprise, the U.S. stock market is the largest in the world, although its share has decreased from 50% in 2000 to 43% today. During these 18 years, Emerging Markets and Asia, namely China, have garnered increasing market shares. The world is changing, ever so gradually.

The U.S. stock market is currently $34 trillion, compared to the rest of the world’s $44 trillion capitalization. The U.S. is 43% of world market value, but it houses only 17% of the world’s stocks. The U.S. is 5000 companies as compared to 25,000 non-US stocks. U.S. companies are much bigger.

The value-weighted average capitalization of U.S. companies is $176 billion, whereas the average capitalization of foreign companies is less than a fourth of that at $37 billion. This disparity is most prominent in technology stocks, where relative size has changed over time. U.S. technology stocks were 2.5 times as big as foreign stocks in 2007; U.S. tech stocks had an average capitalization of $138 billion, versus $50 billion for foreign tech.

But this year U.S. tech stocks are 8 times bigger -- $347 billion versus $45 billion. U.S. technology dominates the world. This rise of the “mega stocks” has preceded market corrections in the past, as frightened, but greedy, investors follow the herd stampeding to the comfort of the gargantuan. This time the market has FAANGs.

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The Most Expensive Stock Market

Barclays Bank recently released their world survey of “Cyclically Adjusted Price-Earnings” (CAPE) Ratios. The US stock market is the most expensive in the world, along with Switzerland, Japan and the Netherlands. Of course that doesn’t mean the US is not worth the price, but it does mean that there are relative bargains in other countries like Russia, Turkey, Israel and Poland. You be the judge.

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But the U.S. is Not the Most Productive Economy

What may surprise you is that the U.S. economy is not the most productive because the $23 trillion GDP of China has surpassed the $19 trillion U.S. GDP, as shown in the following:

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The U.S. isn’t the relative economic powerhouse it used to be. Time will tell where this leads.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.






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