Capitalization to GDP (%)

The following table is compiled from data available from World Bank, which is the Market Capitalization to GDP (%) for selected countries from around the world for 2012.

* This metric of the Market Capitalization to GDP (%) is derived by multiplying the share price of all companies with their shares outstanding and then divide by the GDP. The result is a percentage which measures the total value of the stock market as compared to the output of the economy. The equilibrium being the 100% level and if the metric is above the equilibrium then it is considered overvalued or trading at a premium and vice versa.

* When asked about the Market Capitalization to GDP valuation method in his article appeared in Forbes in 2011. This is what Warren Buffet has to say. “It is “probably the best single measure of where valuations stand at any given moment. If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%-you are playing with fire.

 

 

 

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• Does the higher number mean more over value -playForever- ♂ (93 bytes) () 09/07/2013 postreply 19:48:27