A great look at the market over time courtesy of Ritholtz @ The Big Picture.
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That’s about my least favorite of the charts that Ritholtz periodically posts.
The problem is that there is no theoretical mean market-cap-to-GDP ratio about which to fluctuate.
The companies listed on the two exchanges don’t represent a steady share of US economic output, and they include varying levels of non-US economic activity.
I’m not a fan of trying to use chart patterns to reach any conclusion when there’s no theoretical relationship between the two variables.
This.
It’s a fascinating look at the financialization of the economy (from WW2 to the Nifty Fifty to the bear market of the 60s to the dot-com boom to the crash of 2008) over generational timeframes, but that simply reflects shifts in capital – from small/independent businesses (thousands of local greasy spoons and general stores) to publicly-traded companies (YUM, WMT), and is perhaps now shifting from publicly-traded companies back to private equity.