http://www.dailyreckoning.com.au/gdp-market-cap/2006/12/21/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 10:39:45 -0600 http://wordpress.org/?v=2.8 hourly 1 http://www.dailyreckoning.com.au/gdp-market-cap/2006/12/21/comment-page-1/#comment-29567 Ron Pylant Tue, 08 Jul 2008 03:04:34 +0000 http://www.dailyreckoning.com.au/gdp-market-cap/2006/12/21/#comment-29567 Good discussion. I am not an economist, however I think it might be correct, and possibly valuable, to suggest that the GDP/Mkt Cap indicator is particularily long term, and the time and pain level between approaching an inflection point and reaching an inflection point under current circumstances might be considerable. I'm under the impression that the US market cap is at roughly 109% of GDP, and a correction to 90% of GDP (as in the post tech era) might cost something in the neighborhood of another $2.5 trillion market cap. The US dollar on a trade weighted basis is about as low as it's been in the last 30 years and would require something like a 42% rally to reach the levels of 2002. At what point might one consider that the US market has reached fair value - relative to the declining importance of the US in the world economy? Good discussion. I am not an economist, however I think it might be correct, and possibly valuable, to suggest that the GDP/Mkt Cap indicator is particularily long term, and the time and pain level between approaching an inflection point and reaching an inflection point under current circumstances might be considerable. I'm under the impression that the US market cap is at roughly 109% of GDP, and a correction to 90% of GDP (as in the post tech era) might cost something in the neighborhood of another $2.5 trillion market cap. The US dollar on a trade weighted basis is about as low as it's been in the last 30 years and would require something like a 42% rally to reach the levels of 2002. At what point might one consider that the US market has reached fair value - relative to the declining importance of the US in the world economy?

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