Now that 2Q2014 GDP is in, it's time to look again at the ratio of total stock market capitalization to GDP.
Using the Wilshire 5000 as a proxy for the whole market, you find it closed at 20862.74 on June 30, 2014, the last day of the second quarter. 20862.74 X $1.2 billion = $25.035288 trillion of total stock market capitalization on record date.
Current dollar (that is, nominal) GDP for the second quarter just came in at $17.2947 trillion in this week's report from the Bureau of Economic Analysis.
The ratio of the capitalization divided by the GDP is thus 1.45, ticking up from 1.41 at the end of 1Q2014 (23.995212 divided by 17.044).
The ratio for 1Q2009 was 0.72, exactly half what it is today.
Buyer beware.
