Saturday, January 15, 2011

Global Stock Markets Increase By 26% in 2010

The World Federation of Exchanges reported this week that the total value of equities trading on the world's major stock exchanges reached $54.9 trillion in December, the highest world stock market capitalization since May 2008 (see chart above).  During 2010 the world stock market value increased by 26%, or by $11.3 trillion over the 12-month period, from $43.6 trillion in December 2009. From the February 2009 cyclical low of $26.6 trillion, world equity values have more than doubled, and have gained back about $28.3 trillion of the $36.4 trillion lost during 2008 because of the global financial crisis.   

Further evidence of a global stock market recovery is shown in the chart below of the daily MSCI World Stock Market Index, which closed yesterday at 1308, the highest closing value since early September 2008.

14 Comments:

At 1/15/2011 1:22 PM, Blogger Buddy R Pacifico said...

The World Stock Market Capitalization Chart shows:

A return to values in 1.5 years that previously took 5.5 years (2002-2008) to reach. Amazing.

Thanks Professor, very informative chart.

 
At 1/15/2011 2:25 PM, Blogger Benjamin said...

Die recession, die, die, die.

BTW, the Far East is putting together the greatest economic boom of all time, dwarfing anything that happened in the USA. Invest accordingly.

 
At 1/15/2011 6:25 PM, Blogger PeakTrader said...

The Shanghai Stock Exchange Composite Index is at 2,791.

It's off its all-time high of 6,124 in October 2007, but off a low of 1,665 in October 2008.

 
At 1/15/2011 6:59 PM, Blogger Benjamin said...

OT, but worth a post. These Fed minutes reveal that even serious Fed board members believe the CPI overstates inflation by about one percent. They are minutes of a FOMC meeting from 2005.

You really have to be a conspiracy nut to believe that the Fed, releasing full transcripts five years after the fact, buried references to the CPI overstating inflation to "trick" people into believing the CPI was upside biased.

So, there you have it: The CPI overstates inflation by about one percent, or at least FOMC members believe it does.

Or, you can believe some conspiracy theory about Martians, Ron Paul, the ghost of Jimmy Hoffa and a "fake" CPI tricking you into believing inflation is low.

Read this: http://www.federalreserve.gov/monetarypolicy/files/FOMC20050202meeting.pdf

 
At 1/15/2011 7:49 PM, Blogger Buddy R Pacifico said...

Benji, here is an article by Jim Jubak that outlines global food price inflation. He mentions stocks but offers some insights into food shortages in different countries that might not be well known. The U.S. could be impacted by demand for U.S. agricultural products driving American prices up. Do you recommend more crop subsidies to increase supply or more money supply?

 
At 1/15/2011 8:03 PM, Blogger Paul said...

Benji,

"Or, you can believe some conspiracy theory about Martians, Ron Paul, the ghost of Jimmy Hoffa and a "fake" CPI tricking you into believing inflation is low."

It was only a few months ago you were one of the nuts on the Ron Paul bandwagon.

 
At 1/15/2011 9:44 PM, Blogger VangelV said...

Money printing tends to cause prices to rise, including those of financial assets like stocks. But if you compare the returns from stock markets in gold, silver, wheat, cotton, sugar, coal, iron, platinum, etc., you will see that financial assets have underperformed.

 
At 1/15/2011 11:07 PM, Blogger Benjamin said...

Paul-

Yeah, until I read about Ron Paul's crackpot views on the Fed. Paul is a danger to the Republic, along with the Nipponistas.

Global demand is pushing up commoidties prices. So what? The long, long term trend on commodities is down. Commodities, as a group, have only tripled since 1967, underperforming many other asset classes.

Gold peaked at $2300-2400 an ounce in 1980, adjusted for inflation. If you bought at the height of gold fever then you are still down half after 30 years. You are a big loser. And we have gold fever now--buyer beware. When halfwits like Glenn Bleck are braying about gold, then probably it is time to cash in your chips.

I doubt commodities can stay this high--profits are fat, jack. That will draw new investment, encourage conservation. Then you get a crash. Who knows when.

I have been through this cycle before--in the late 1970s, we were going to run out of everything by 2000. No more gasoline. "The Limits to Growth" was a big hit, read by serious grad students like me. How wrong I was, and that book.

If you had invested in stocks and land in 1980, you would have hit a grand slam out of the park and into the next county.

Right now is a similar opportunity. The Dow has done nothing since 1999 (and Clinton). We could see a whole 10-year secular bull market, starting about now.

And you little shiney bits of metal will be worth less then than now.

 
At 1/15/2011 11:43 PM, Blogger sethstorm said...

Global doesn't matter when your concerns are national.

 
At 1/16/2011 9:07 AM, Blogger Paul said...

"Yeah, until I read about Ron Paul's crackpot views on the Fed."

So you were boosting Ron Paul, a guy who has been around politically for decades, but you weren't even aware of his most well known position? Well, that explains how you could pull the lever for Obama. I guess we need to give you a few years to learn about him, too.

"The Dow has done nothing since 1999 (and Clinton)."

Clinton left office in January 2001, the Dow started crashing "on his watch."

 
At 1/16/2011 1:36 PM, Blogger Ron H. said...

Benji: - "The Dow has done nothing since 1999 (and Clinton)."

Paul: - Clinton left office in January 2001, the Dow started crashing "on his watch."

Benji often uses a different calendar than the one most other people use, but the dates work well with his narrative.

 
At 1/16/2011 3:44 PM, Blogger VangelV said...

I doubt commodities can stay this high--profits are fat, jack. That will draw new investment, encourage conservation. Then you get a crash. Who knows when.

It takes a long time to approve a mine. During that time we will see depletion take its toll and some of the great old producers wind down their operations. With idiots like Obama and Chavez getting in the way it will be hard for new investment in energy to lead to much production and it is doubtful that we can offset depletion even if the idiot politicians understood the danger. And with governments objecting to the use of GM seeds to help us offset the problems that farmers are experiencing with the weather it is unlikely that food production will catch up to demand for a while. And as all this is happening the older people who understood what it took and had the skills to produce ore, agricultural commodities, and energy will be retiring and unavailable to build the next set of mines, or operate the next set of oil fields, or plantations.

 
At 1/16/2011 3:48 PM, Blogger VangelV said...

Right now is a similar opportunity. The Dow has done nothing since 1999 (and Clinton). We could see a whole 10-year secular bull market, starting about now.

And you little shiney bits of metal will be worth less then than now.


I take it that you were not paying much attention. In 1980 the Dow was paying 6% in dividends and was selling for an ounce of gold. It is now less than 2% and is selling for just under 10 ounces. To provide a buying opportunity that will give us a decent real, rather than just a nominal, return the Dow will have to fall by more than half and gold would have to rise by a factor of two or three.

You could very well be right about the short term outperformance but I would not bet my money on a long term gain of the Dow against gold for quite some time.

 
At 1/16/2011 9:44 PM, Blogger juandos said...

Maybe some of that supposed increase could be questionable if this Bloomberg news has any substance...

Worthless Stocks from China

When a retiree in Texas discovered that some Chinese companies listed in the U.S. are frauds, he unleashed an army of short-sellers

 

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