Bob's Daily Buzzword: Market Cap/GDP Ratio

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Sept. 25 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners LLC, explains "Market Cap/GDP Ratio." (Source: Bloomberg)

Bob rice is here.

What kind of numbers are we talking about?

By itself, it is self- explanatory.

You take the market cap and compare that to gdp ratio.

Where are we?

We are pretty much at $17 trillion in market cap.

We have pretty much $17 trillion in gdp.

We have a ratio just north of one right now.

How does this backup?

That is where it gets interesting.

We have a chart.

You can see we have only been north of one a couple of other times.

If you look at when they were, one of them was 2000 and one was 2007. historically speaking, that could make you nervous.

Make you nervous because you could say may stocks are overvalued.

What else could you conclude a? because of technology, more of our gdp is actually flowing into corporate profits than was historically true.

Toward his -- toward corporate profits and away from the labor force.

That would explain a higher ratio and it is not so scary.

Is there another ratio that happens to be scary, or not?

Is there another way to read this?

You could also say, of course that is true, because we are talking about u.s. gdp and there are corporations that are major players around the world and pulling their profits from other players -- places around the world.

This text has been automatically generated. It may not be 100% accurate.


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