market value of all publicly traded securities as a percentage of GNP.

[matjone]

This is what Buffett says is the single best valuation measure for the whole market, but I don't know where to find it.  Does anyone else?  I can find GNP, and I can find some info on stock market cap, but I assume he includes debt in this too. 

 

It would be interesting to see the data for other countries as well.

[racemize]

I would also be very interested in that.

[Valuebo]

Maybe this helps?

 

http://www.gurufocus.com/stock-market-valuations.php

[racemize]

Maybe this helps?

 

http://www.gurufocus.com/stock-market-valuations.php

 

That's pretty great.  Dynamic updating ftw.

[matjone]

well, from the world federation of exchanges the 2011 eoy market cap values are

 

NYSE 11.8 Tn

Nasdaq 3.8Tn

 

I'm having trouble finding current data for corporate bonds, but I think this would be around 8 Tn. GNP for 2011 was 14.6 Tn

 

so the ratio would be around 160%.  I am not at all sure if I am doing this right though.

[jacobwolinsky]

Here is Europe and country specific: Stats are from morgan Stanley-http://www.valuewalk.com/2012/03/european-shiller-pe-below-13-ero/

[matjone]

Thanks for the replies, guys.  I will take a look at both of those sites.

[Guest]

The problem with the gurufocus one is that it measure GDP instead of GNP. I don't think it makes a super huge difference though.

[fenris]

Is this metric not dependent on what percentage of companies is actually publicly traded?

Does anybody have information on how that changed over time?

[matjone]

I am also wondering if you include debt, which gurufocus does not.  The reason I thought you would is that in the article buffett said "all publicly traded securities", and not just equity securities.  Also, he said that the ratio was close to 200% in 99-00, and the only way I could get that from the data I was pulling up was to include debt.  Plus it makes sense.  Would the market suddenly become cheap if everyone borrowed and bought back shares till the ratio was down to 70? 

[matjone]

I wondered the same thing.

[WarrenWatsa]

I have heard that the right way to calculate it is the market cap of the Wilshire 5000 divided by GNP...

[Shane]

I understand the convention of using publicly traded companies, but to me this seems like there are a lot of obvious flaws.  Maybe in the U.S. this has worked but what about if Private companies become a large part of the GNP?

 

Anyone have input on this?

[anders]

Could anyone please explain the logic why Buffett states that it is probably the best measure?  ???

 

Is it because, in overall, the comps cant grow faster than the economy as a whole..? but many of them are global - ie apple - so where does the logic come in to compare an index of international comps with us gnp figures..? Further, over the last 65 years, s&p500 has a higher CAGR (even excluding dividends) than US gdp.

 

Would really appreciate if anyone could provide thoughtful insight into this.

 

[matjone]

From what I understand GNP includes foreign earnings of U.S. companies, and GDP does not.