A serious question about the stock market.

[uscitizen]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

 

[Paulie]

It's somewhere near 100% right now for just total stock market cap/GDP. When you add commodities in it's much greater. Usually that means overvalued but that doesn't always mean sell.

 

[expat_panama]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

GDP = consumption + investmenents + exports - imports + gov't purchases, so that would include money spent buying stocks as well as factory buildings and machinery. The BEA adds it all up and their website (http://bea.gov/iTable/index_nipa.cfm) has the latest GDP at $15t, and the total investment part is $1.9T.

 

[Paulie]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

GDP = consumption + investmenents + exports - imports + gov't purchases, so that would include money spent buying stocks as well as factory buildings and machinery. The BEA adds it all up and their website (http://bea.gov/iTable/index_nipa.cfm) has the latest GDP at $15t, and the total investment part is $1.9T.

Yeah that's probably what he was actually looking for. At first I thought he meant cap/GDP which is about 100% of it.

 

[Foxfyre]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

I don't think you could ever quantify the DOW or NASDAQ or S&P or whatever as a percentage of the GDP. The Market is driven by business investment.

GDP = C + G + I + NX

"C" is equal to all private consumption, or consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on capital
"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

 

[percysunshine]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

GDP = consumption + investmenents + exports - imports + gov't purchases, so that would include money spent buying stocks as well as factory buildings and machinery. The BEA adds it all up and their website (http://bea.gov/iTable/index_nipa.cfm) has the latest GDP at $15t, and the total investment part is $1.9T.

The government can only purchase with money it takes.

Net Zero. (well, plus a Biden transaction fee)

 

[waltky]

Granny says don't worry, be happy - she seen worse...

Dow drops 1,147 points over three trading days. Is that a 'crash'?
August 8, 2011 - The Dow has lost 9.13 percent of its value over three days of trading. It's bad, but investors have seen much worse in previous sell-offs. Still, 'crash' versus 'correction' is a matter of debate.

After Black Tuesday, Oct. 29, 1929, Variety declared “Wall Street lays an egg,” to describe a drop of 23 percent in the stock market over two days. In the stock market “crash” of 1987, the Dow Jones Industrial Average lost 22.6 percent of its value in one day. On Monday, the Dow dropped 634.76 points to 10809.85. Does the sharp decline qualify as a “crash?” To some market observers, the latest decline is merely a “correction,” compared with what happened in 1929 and 1987. Despite the large drop – some 513 points last Thursday, as well – the Dow is down 9.13 percent over three days of trading. “A stock market crash is in the range of 25 percent or more in one day,” says Fred Dickson, chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Ore. “We’re down about 10 percent in 10 days.”

Here are some of the worst market sell-offs:

Oct. 19, 1987, also called “Black Monday.” Over the weekend before, Iran had fired missiles over the Persian Gulf, causing some nervous moments. But then, an article in The New York Times claimed that the US wanted a lower-valued dollar. This prompted foreign investors to start to dump stocks because they would be worth less money in dollar terms. The markets at the time did not have any circuit-breakers, which now stop trading after about a 10 percent decline in one day. Instead, the falling markets resulted in yet more selling, which basically snowballed as computer-generated trades kept pressure on the market the entire day. “The only thing that kept the market from melting down even more was the closing bell,” recalls Mr. Dickson. The next day the Federal Reserve Bank stepped in, reducing interest rates. The stock market reversed itself, moving higher.

Oct. 28 and 29, 1929. On Monday the 28th, the stock market fell 12.82 percent and then dropped another 11.73 percent the next day. The stock market of the 1920 had a lot of “wild West” in it, with little supervision over trading. The public had become enthusiastic buyers of stock, using “margin,” or borrowed money, to finance their purchases. Thus, when the market dropped sharply – in an era when stock prices were not instantaneously known – the public lost most of their savings. This lead to the Great Depression and, eventually, to reforms such as the formation of the Securities and Exchange Commission.

MORE

 

[uscitizen]

What percentage of GDP is made up from stock market and similar investment monies, such as commodities futures, etc?

GDP = consumption + investmenents + exports - imports + gov't purchases, so that would include money spent buying stocks as well as factory buildings and machinery. The BEA adds it all up and their website (http://bea.gov/iTable/index_nipa.cfm) has the latest GDP at $15t, and the total investment part is $1.9T.

Yeah that's probably what he was actually looking for. At first I thought he meant cap/GDP which is about 100% of it.

Yep pretty much what I wanted.

 

[william the wie]

Stock market valuation is not part of GDP normally and neither are bonds, existing houses, commodity reserves and anything else not produced or imported and sold or used internally this year. I don't know about IPOs, which may very well be part of GDP but ownership transfers other than imports and exports are not counted excepting transfers from the producer to the consumer. So, even though PEP has always known what he was talking about when I bothered to check I suspect the data he found was VC, founder and IPO shares since normally stock transfers are treated like used car sales i. e. not counted as GDP.