I often write about keeping perspective when hearing on the news about large numbers - those "in the trillions" dollars.
Size, stability and efficiency are three key attributes of any equity market and should be considered if you diversify into international companies, small-cap companies, emerging markets, commodities and other areas (like frontier markets).
The average turnover of the top 10 U.S. companies is 16% of the total world market. That means that, to put it simply, nearly 2 out of every 10 trades are in the those top 10 U.S. companies. That is a lot of concentration even still for a global economy. The entire country of Japan (the 2nd largest economy) represents 25% of world trade activity compared to just these 10 companies in the U.S.
The world bond market is around $61 trillion and the world stock market is a little less at around $56 trillion (now these numbers are always changing but the point is to give you an idea of the size of the financial markets). Derivatives were, at one time, around $500 trillion but after this global economic crisis have retreated substantially.
The point is that it is huge.
How many Treasury bonds are currently outstanding by the U.S. Government that are publicly held? About $6 trillion - or only about 10% of the total bond market. The news repeatedly hypes the U.S. deficit (annual numbers) and U.S. debt (accumulated amount of all years) and they are large but perspective is still helpful to keep.
Sites to research: www.wsjmarkets.com; www.bloomberg.com
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.