| Date | U.S. Equity Market Value (USD, Million) | Top 500 U.S. Companies Market Value (USD, Million) |
|---|---|---|
| 12/31/2019 | 33,905,976.7 | 28,125,589.1 |
| 12/31/2018 | 30,449,359.4 | 22,065,655.2 |
| 12/31/2017 | 31,774,585.4 | 23,938,148.8 |
| 12/31/2016 | 27,362,567.7 | 20,222,191.7 |
What is the total value of the American stock market?
There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising. At the high end of the spectrum is the mighty NYSE, representing $18.5 trillion in market capitalization, or about 27% of the total market for global equities.
What is the total valuation of the stock market?
Vanguard Total Stock Market ETF ( VTI) - 315,650 shares, 34.87% of the total portfolio. Shares added by 23.47% Vanguard S&P 500 ETF ( VOO) - 133,667 shares, 26.70% of the total portfolio.
How much is the US stock market worth?
Let’s get straight to the point. According to Siblis Research, as of March 31, 2021, the total market capitalization of the US stock market is $49,107,685,700,000. In other words, over $49 trillion. That’s the combination of all the publicly owned companies on the NYSE and Nasdaq, plus over-the-counter (OTC) markets.
Is the U.S. stock market overvalued?
The US stock market is not overvalued and in fact is actually inexpensive. Historical price to earnings multiples are misleading because they were based on interest rates and earnings growth rates at that time. Price to sales and price to book multiples ignore operating margins and physical asset intensity.
Core Valuation Models
We currently track five different models to evaluate whether the US stock market is accurately priced, relative to long-term historical patterns and fundamental indicators. Each model is illustrated below, with much more detail available by clicking into each. Models are updated weekly, or as data becomes available.
Yield Curve Model: Fairly Valued
If the spread between the 10-year and 3-month Treasury yield is negative (when 3mo yield is higher than 10y), it is a bearish signal that is almost always followed by economic recession.
Buffett Indicator Model: Overvalued
The ratio of the total value of the US stock market vs current GDP. Originally a favorite valuation indicator of Warren Buffett.
S&P500 Mean Reversion Model: Overvalued
This model simply assumes that over time the S&P500 will tend to revert back to its own long term trend line.
Interest Rate Model: Fairly Valued
For several reasons, low interest rates tend to push stock prices higher. This model considers current US stock market prices relative to US Treasury interest rates.
Margin Debt Model: Strongly Overvalued
The model looks at the level of margin debt that investors use to finance further stock purchases.
Posts
Shorter form blog-style posts on various stock/economy related topics, but not limited to market valuation. These are generally not updated after they are posted.
How to calculate the P/E ratio of the US stock market?
The same analysis can be done to the entire stock market. By adding up the price of every share in the S&P500, and comparing that to the sum of all earnings-per-share generated by those companies , you can easily calculate the P/E ratio of the US stock market.
How does the S&P 500 price compare to earnings?
Just by eyeballing that chart you can see that both have steadily risen over time, and that S&P500 price tends to stay (very roughly) 10x-20x larger than yearly earnings . Chart 2A shows only the last twenty years of data, which highlights the conspicuous divergence of this trend in the prior year, where S&P price has gone up, but earnings are dropping precipitously. Let's observe this relationship between Price and Earnings explicitly by charting the P/E ratio, below.
What is the key to investing?
An important key to investing, Lynch says, is to remember that stocks are not lottery tickets. There’s a company behind every stock and a reason companies—and their stocks—perform the way they do. In this book, Peter Lynch shows you how you can become an expert in a company and how you can build a profitable investment portfolio, based on your own experience and insights and on straightforward do-it-yourself research.
What does the color of the S&P 500 mean?
First, the main line shows the standard S&P500 since 1950, but color coded according to the standard deviation bands in Figure 4. I.e., when the S&P500 was more than 1 standard deviation below its P/E average (such as in 1950, and again during the mid-70's to mid-80's) the chart is colored dark green, signifying undervaluation and a buying opportunity. While this clearly demonstrates that the P/E valuation model is correlated with S&P500 returns (by definition) in the long run, it also shows that the value is limited in trying to time the market for ideal entry/exit points. For example, this model would have shown that the early 1980's was severely undervalued and a great buying opportunity, and also that the late 90's were severely overvalued and a good exit spot. However the model missed the tech crash of the early 2000's, where even at the lowest point of that crash the market was still overvalued according to this model.
What are value stocks?
Most stocks are classified as either value stocks or growth stocks. Generally speaking, a value stock trades for a price that’s cheaper than its financial performance and fundamentals suggest that it’s worth. A growth stock is a stock in a company expected to deliver above-average returns compared to its industry peers or the overall stock market.
What is the best stock valuation metric?
P/E ratio: This is the best-known stock-valuation metric, and for a good reason. The price-to-earnings, or P/E, ratio can be a very useful tool for comparing valuations of companies in the same industry. To calculate it, simply divide a company's stock price by its last 12 months of earnings.
What are the best stocks to buy for beginners?
3 best value stocks for beginners 1 Berkshire Hathaway: Since CEO Warren Buffett took over in 1964, Berkshire Hathaway has snowballed into a conglomerate of more than 60 wholly owned businesses and a massive stock portfolio with more than four dozen different positions. Berkshire has steadily increased its book value and earnings power over time -- and it currently operates under the same business model that has led the stock to more than double the annualized return of the S&P 500 index for over 55 years. 2 Procter & Gamble: Consumer products manufacturer Procter & Gamble is the company behind brands such as Gillette, Tide, Downy, Crest, Febreze, and Bounty, but there are dozens more in its product portfolio. Through the success of its many brands, Procter & Gamble has been able to steadily add to its revenue over time and has become one of the most reliable dividend stocks in the market, increasing its payout annually for more than 60 consecutive years. 3 Johnson & Johnson: The healthcare giant is best known for its consumer healthcare products, such as the Band-Aid, Tylenol, Neutrogena, Listerine, and Benadryl brand names, just to name a few. But the majority of its revenue comes from its pharmaceutical and medical device businesses. Healthcare is one of the most recession-resistant businesses in the economy, and Johnson & Johnson has produced steady revenue (and dividend) growth over time.
What is a growth stock?
Generally speaking, stocks that trade for valuations below that of the average stock in the S&P 500 are considered value stocks, while stocks with above-average growth rates are considered growth stocks. Some stocks have both attributes or fit in with average valuations ...
Who is the best value investor?
Warren Buffett, the CEO of Berkshire Hathaway, is perhaps the best-known value investor of all time. From the point that Buffett took control of Berkshire in 1964 to the end of 2019, the S&P 500 has generated a total return of 19,784%. Berkshire's total return during the same period has been a staggering 2,744,062%. That's not a typo.
Is Tesla a growth stock?
For example, 130-year-old spice manufacturer McCormick ( NYSE:MKC) is clearly a value stock, while fast-moving Tesla ( NASDAQ:TSLA) is an obvious example of a growth stock. On the other hand, some stocks can fit into either category. For example, there's a case to be made either way for tech giants Apple ( NASDAQ:AAPL) and Microsoft ( NASDAQ:MSFT).
Is Procter and Gamble a dividend stock?
Through the success of its many brands, Procter & Gamble has been able to steadily add to its revenue over time and has become one of the most reliable dividend stocks in the market, increasing its payout annually for more than 60 consecutive years.
