A Different Perspective on Global Stock Markets

By Dan Crimmins on November 16, 2015 in Investing

Sometimes seeing something from a different perspective helps bring additional insight to a subject. Below is a view of the world – not from the traditional view according to land mass that we are all familiar with from grade school. This graph demonstrates the size of the countries according to the value of the companies based in the countries that they are publicly traded.

This view helps educate on 2 fronts: one by showing the continued strong value of U.S. based companies in comparison to the other international companies. This strength is demonstrated in the graph by the “land mass of the United States” being a little over half the global land mass; and second, the need to own international companies in one’s portfolio to capture the other 48% of global company value.

Some other things also jump out: Our 2 large geo-political foes seem quite small: China and Russia. This represents how most of the companies in these countries are not available to private investors. Sometimes it helps to take a look at the world through an unconventional perspective when thinking about the size of things.

The map from Bank of America Merrill Lynch’s Chief Investment Strategist Michael Hartnett shows the world according to free-float equity market capitalization (market cap) in billions of dollars measured by the MSCI.

Free-float methodology market capitalization is calculated by taking the company stock price and multiplying it by the number of shares readily available in the market. MSCI‘s has been at the forefront of index construction and maintenance for more than 40 years, launching its first global equity indexes in 1969. These indices are used by institutional money managers to benchmark their performance worldwide.

The graph highlights that the United States, with a market cap of $19.8 trillion, is the biggest market and represents 52% of the world’s market cap. Japan is in second place at $3 trillion, followed by the UK at $2.7 trillion, and then France at $1.3 trillion.

Check out the whole map below.

Remember this perspective when you hear the news discussing the “crisis” in Greece or some other small foot-print country.

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The foregoing content reflects the opinions of Crimmins Wealth Management and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.