6 ms·

The＄109T global stock market in one chart

Scalene2 3y ago
Why isn't this a pie chart?
- JumpCrisscross 3y ago
  > Why isn't this a pie chart? This visual seems to better preserve the size of smaller markets, like Singapore and Australia. In a pie chart, they'd be indecipherable.
  - renewiltord 3y ago
    Interesting. It appears to me that I can better tell area differences between nicely shaped objects rather than long narrow objects. Is there a measure that can tell how nicely shaped an object is? The obvious one I could come up with is ratio of area of object to area of bounding circle. Closer to 1 is good. Lower than some threshold we pick is bad. I'm sure someone must have thought of this problem. It certainly works to optimize squatter triangles over long narrow triangles, and these shapes over arcs.
    - alanbernstein 3y ago
      One related problem: rating political districts for gerrymandering.
      - renewiltord 3y ago
        Ah ha I thought that and instantly dismissed it as "that's just convexity" but that's obviously false. You're right. Good one.
- throw0101a 3y ago
  "There is no data that can be displayed in a pie chart, that cannot be displayed BETTER in some other type of chart." — https://en.wikipedia.org/wiki/John_Tukey https://en.wikipedia.org/wiki/John_Tukey "Pie charts are completely useless." — https://en.wikipedia.org/wiki/Jacques_Bertin https://en.wikipedia.org/wiki/Jacques_Bertin "Pie charts subtract from the world's knowledge." — https://en.wikipedia.org/wiki/Edward_Tufte https://en.wikipedia.org/wiki/Edward_Tufte , https://www.google.com/search?q=edward+tufte+pie+charts https://www.google.com/search?q=edward+tufte+pie+charts > Pies and doughnuts fail because: > Quantity is represented by slices; humans aren’t particularly good at estimating quantity from angles, which is the skill needed. > Matching the labels and the slices can be hard work. > Small percentages (which might be important) are tricky to show. * https://scc.ms.unimelb.edu.au/resources/data-visualisation-and-exploration/no_pie-charts https://scc.ms.unimelb.edu.au/resources/data-visualisation-a...
- muti 3y ago
  Furthermore, what is this kind of chart called? How was it laid out? Is it a one off manual kinda deal. Does this even have any advantages over a pie chart? IIRC people are not good at judging relative area at all, even circles. How much does un-wedging the pie help? At least with a pie chart you can try to compare arc length which may be easier?
JumpCrisscross 3y ago
Presenting the EU's stock exchanges as a monolith is misleading. It's been a recurring gripe [1]. [1] https://newfinancial.org/wp-content/uploads/2021/03/2021.03-The-problem-with-European-stock-markets-New-Financial.pdf https://newfinancial.org/wp-content/uploads/2021/03/2021.03-...
ComputerGuru 3y ago
I think the EU data is already stale and ASML is currently the most valuable publicly traded European enterprise. I know which I'd be more proud of!
- hrunt 3y ago
  As of September 5, it's Novo Nordisk, maker of Ozempic and Wegovny.
  - ComputerGuru 3y ago
    Wow, those were a very brief 15 minutes for ASML!
smegsicle 3y ago
[flagged]
swyx 3y ago
as a singaporean i enjoy that our little stock market that never goes anywhere (literally the ST Index has been ~3k for like 20 years) is some how big enough to register on this chart lol
- unmole 3y ago
  While Singapore is a financial powerhouse, the break up in TFA is a bit arbitrary. For instance, the Indian market has a capitalisation of ~$3.3T but is included in "Other Developed Markets" instead of being a separate entry.
MuffinFlavored 3y ago
I have this friend who is too hard of a die hard capitalist at heart (whatever that means). He reads headlines of UAW workers going on strike to ask a company making $10b/yr in profit to give them a bit more and he sides on the side of the company, you know what I mean? Long story short, he's come to say "America has gone soft". He thinks anybody who works from home is doing blatant time theft, needs to be tracked, etc. He thinks that what we classify as a $20/hr job in America is $2/hr elsewhere. If that's the case culturally and the Chinese value working hard (where as in America if you scroll on Instagram you'll see 5-10 memes recommended to you about 'you are not your job, fck your job, fck your meeting'), why is our economy more successful than theirs?
- pdonis 3y ago
  > why is our economy more successful than theirs? "Higher market cap of equities" is not the same as "economy more successful". First, much of the current market cap is due to past successes, which is not the same as current or future successes. Second, market cap is denominated in currency, and governments manipulate the currency. In the case of the US, much of the "growth" in the market cap of equities is due to the US government printing money. For example, the article says that US equities grew by about a factor of 20 from 1990 to 2003 ($100 invested in the S&P 500 in 1990 grew to $2000 in 2023). But over the same time period, the US money supply grew by a factor of about 7. So the real growth (i.e., after factoring out the money supply effect) in US equities was only about 20/7, or a factor of about 2.9. Which is much less impressive--indeed, since the article says the factor of 20 was about 4 times the growth in other countries, the adjusted US factor of 2.9 might well be less than the real growth in other countries.
  - e63f67dd-065b 3y ago
    This is mostly correct, but in an extremely unhelpful way. Inflation-adjusted CAGR over the past 30 years is ~~10~~7%. During that time, the average P/E ratio of the S&P 500 (that's what I could easily find) has hovered pretty consistently around 15-20. So the rise in equity prices is, as far as I can tell, directly attributable to increases in earnings (as it should be; after all, theoretically, stock prices are discounted future cash flows). Directly adjust for money supply is not a particularly good way of measuring, well, anything. There's a reason talk about M1/M2/etc have mostly fallen out of favour: we realised that they don't really mean anything, and the numbers are mostly useless for crafting policy or analysing things we care about. Adjusting for inflation is the standard metric for good reason. That's a much better measurement of real economic growth (real in this context usually means adjusting for inflation, instead of money supply. Almost nobody does the latter). Money supply should grow with economic activity; it would be strange for a much larger economy to be measured relative to a much smaller relative money supply.
Boogie_Man 3y ago
This chart visually clears up some of the confusion I've seen people have about being "overweight" in domestic stocks while tracking a global index.
- rainbowzootsuit 3y ago
  Interesting that FTSE Global All Cap Index weights the US as about 60% / 40% international including emerging markets. MSCI World Index (the maker of the plot) is about 69% US as it leaves out emerging markets. I wonder what's in this plot that's left out of the FTSE index that would to make it US 43%. https://investingintheweb.com/education/ftse-all-world-vs-msci-world/ https://investingintheweb.com/education/ftse-all-world-vs-ms...
nnx 3y ago
I'm surprised Japan's stock market is so small comparatively.
- dwg 3y ago
  Worth mentioning that the population of Japan is about 1/3 of U.S., and if the chart was population adjusted it would look different.

Why isn't this a pie chart?

JumpCrisscross 3y ago
> Why isn't this a pie chart? This visual seems to better preserve the size of smaller markets, like Singapore and Australia. In a pie chart, they'd be indecipherable.
- renewiltord 3y ago
  Interesting. It appears to me that I can better tell area differences between nicely shaped objects rather than long narrow objects. Is there a measure that can tell how nicely shaped an object is? The obvious one I could come up with is ratio of area of object to area of bounding circle. Closer to 1 is good. Lower than some threshold we pick is bad. I'm sure someone must have thought of this problem. It certainly works to optimize squatter triangles over long narrow triangles, and these shapes over arcs.
  - alanbernstein 3y ago
    One related problem: rating political districts for gerrymandering.
    - renewiltord 3y ago
      Ah ha I thought that and instantly dismissed it as "that's just convexity" but that's obviously false. You're right. Good one.
throw0101a 3y ago
"There is no data that can be displayed in a pie chart, that cannot be displayed BETTER in some other type of chart." — https://en.wikipedia.org/wiki/John_Tukey https://en.wikipedia.org/wiki/John_Tukey "Pie charts are completely useless." — https://en.wikipedia.org/wiki/Jacques_Bertin https://en.wikipedia.org/wiki/Jacques_Bertin "Pie charts subtract from the world's knowledge." — https://en.wikipedia.org/wiki/Edward_Tufte https://en.wikipedia.org/wiki/Edward_Tufte , https://www.google.com/search?q=edward+tufte+pie+charts https://www.google.com/search?q=edward+tufte+pie+charts > Pies and doughnuts fail because: > Quantity is represented by slices; humans aren’t particularly good at estimating quantity from angles, which is the skill needed. > Matching the labels and the slices can be hard work. > Small percentages (which might be important) are tricky to show. * https://scc.ms.unimelb.edu.au/resources/data-visualisation-and-exploration/no_pie-charts https://scc.ms.unimelb.edu.au/resources/data-visualisation-a...
muti 3y ago
Furthermore, what is this kind of chart called? How was it laid out? Is it a one off manual kinda deal. Does this even have any advantages over a pie chart? IIRC people are not good at judging relative area at all, even circles. How much does un-wedging the pie help? At least with a pie chart you can try to compare arc length which may be easier?

Presenting the EU's stock exchanges as a monolith is misleading. It's been a recurring gripe [1]. [1] https://newfinancial.org/wp-content/uploads/2021/03/2021.03-The-problem-with-European-stock-markets-New-Financial.pdf https://newfinancial.org/wp-content/uploads/2021/03/2021.03-...

ComputerGuru 3y ago

I think the EU data is already stale and ASML is currently the most valuable publicly traded European enterprise. I know which I'd be more proud of!

hrunt 3y ago
As of September 5, it's Novo Nordisk, maker of Ozempic and Wegovny.
- ComputerGuru 3y ago
  Wow, those were a very brief 15 minutes for ASML!

smegsicle 3y ago

[flagged]

swyx 3y ago

as a singaporean i enjoy that our little stock market that never goes anywhere (literally the ST Index has been ~3k for like 20 years) is some how big enough to register on this chart lol

unmole 3y ago
While Singapore is a financial powerhouse, the break up in TFA is a bit arbitrary. For instance, the Indian market has a capitalisation of ~$3.3T but is included in "Other Developed Markets" instead of being a separate entry.

MuffinFlavored 3y ago

I have this friend who is too hard of a die hard capitalist at heart (whatever that means). He reads headlines of UAW workers going on strike to ask a company making $10b/yr in profit to give them a bit more and he sides on the side of the company, you know what I mean? Long story short, he's come to say "America has gone soft". He thinks anybody who works from home is doing blatant time theft, needs to be tracked, etc. He thinks that what we classify as a $20/hr job in America is $2/hr elsewhere. If that's the case culturally and the Chinese value working hard (where as in America if you scroll on Instagram you'll see 5-10 memes recommended to you about 'you are not your job, fck your job, fck your meeting'), why is our economy more successful than theirs?

pdonis 3y ago
> why is our economy more successful than theirs? "Higher market cap of equities" is not the same as "economy more successful". First, much of the current market cap is due to past successes, which is not the same as current or future successes. Second, market cap is denominated in currency, and governments manipulate the currency. In the case of the US, much of the "growth" in the market cap of equities is due to the US government printing money. For example, the article says that US equities grew by about a factor of 20 from 1990 to 2003 ($100 invested in the S&P 500 in 1990 grew to $2000 in 2023). But over the same time period, the US money supply grew by a factor of about 7. So the real growth (i.e., after factoring out the money supply effect) in US equities was only about 20/7, or a factor of about 2.9. Which is much less impressive--indeed, since the article says the factor of 20 was about 4 times the growth in other countries, the adjusted US factor of 2.9 might well be less than the real growth in other countries.
- e63f67dd-065b 3y ago
  This is mostly correct, but in an extremely unhelpful way. Inflation-adjusted CAGR over the past 30 years is ~~10~~7%. During that time, the average P/E ratio of the S&P 500 (that's what I could easily find) has hovered pretty consistently around 15-20. So the rise in equity prices is, as far as I can tell, directly attributable to increases in earnings (as it should be; after all, theoretically, stock prices are discounted future cash flows). Directly adjust for money supply is not a particularly good way of measuring, well, anything. There's a reason talk about M1/M2/etc have mostly fallen out of favour: we realised that they don't really mean anything, and the numbers are mostly useless for crafting policy or analysing things we care about. Adjusting for inflation is the standard metric for good reason. That's a much better measurement of real economic growth (real in this context usually means adjusting for inflation, instead of money supply. Almost nobody does the latter). Money supply should grow with economic activity; it would be strange for a much larger economy to be measured relative to a much smaller relative money supply.

Boogie_Man 3y ago

This chart visually clears up some of the confusion I've seen people have about being "overweight" in domestic stocks while tracking a global index.

rainbowzootsuit 3y ago
Interesting that FTSE Global All Cap Index weights the US as about 60% / 40% international including emerging markets. MSCI World Index (the maker of the plot) is about 69% US as it leaves out emerging markets. I wonder what's in this plot that's left out of the FTSE index that would to make it US 43%. https://investingintheweb.com/education/ftse-all-world-vs-msci-world/ https://investingintheweb.com/education/ftse-all-world-vs-ms...

nnx 3y ago

I'm surprised Japan's stock market is so small comparatively.

dwg 3y ago
Worth mentioning that the population of Japan is about 1/3 of U.S., and if the chart was population adjusted it would look different.