3 ms·

I don’t even directionally have an idea how much is it. Is it like 80% of the current total market value or 8%? My back of the envelope math plus very coarse as

I don’t even directionally have an idea how much is it. Is it like 80% of the current total market value or 8%? My back of the envelope math plus very coarse assumptions lead me closer to 80%.

s1artibartfast 2y ago
To be clear, you are talking about the aggregate for the current holders, understanding that actual cost basis will be different for every person with stock? Some people will have long invest duration with tiny cost basis, some will have cost basis over 100%. My ballpark guess is less than 80%. Most of the stock market is owned by households, either directly through equities, or indirectly through mutual funds and pensions [2, p14] Most individuals and pensions are long term positions, with buying and selling to increase or decrease a position, not buying or liquidating entire portfolios. If I guess the average hold time is ~5 years, that would be a about a 60% basis. US total stock market cap in feb 25' was 67 Trillion, Total market cap in feb 20' was 40 trillion. [1] What conclusion are you trying to draw from it? From an individual perspective, I care more about my cost basis in my market account, than the cost basis for an individual stock. I might have a 95% cost basis my current holding, but a 5% cost basis for my entire account(what I put in the market) https://focus.world-exchanges.org/issue/february-2020/market-statistics https://focus.world-exchanges.org/issue/february-2020/market... https://www.sifma.org/wp-content/uploads/2019/10/SIFMA-Insights-Who-Owns-Stocks-in-America.pdf?utm_source=chatgpt.com https://www.sifma.org/wp-content/uploads/2019/10/SIFMA-Insig...
- gizajob 2y ago
  I’d hazard that average hold time is much shorter. What makes you say 5 years? My gut tells me that the majority of stocks are held by whales moving them in and out on a constant basis nowadays.
  - s1artibartfast 2y ago
    I stated most of my rationale in the post, but I don't think whales buy and sell most of their portfolio. I think they move a tiny portion over and over again.
- whatever1 2y ago
  I am trying to understand how much the stock market can drop before we destroy realized value (cash). Or how much money is not used in the economy, but rather it is tied to the stock market.
  - tacostakohashi 2y ago
    Leaving aside any drops, the entire market cant be sold/liquidated at once at it's current market cap / value. The current "value" / market cap of any given stock / the market is based on whatever tiny fraction of shares traded today.
    - whatever1 2y ago
      Outside the ~ 5 Trillion USD that went to primary market (IPOs, secondary offerings and share issuances) since 1970 and flowed to the actual companies, there is a significant amount of cash that is tied in the secondary market speculating the value of the stocks instead of e.g. providing liquidity to the economy. I am trying to understand how much is that.
      - tacostakohashi 2y ago
        Hmm, not really. If you buy some shares from me for $1000, we settle and I give you the shares and you give me the $1000, and I can spend the $1000 on plane tickets or wine or put it in the bank or whatever, there is no $1000 that is "tied" to any shares. Perhaps you value those shares at $1000 on your balance sheet as their "book value" or "cost basis" or whatever, but the $1000 doesn't exist (you gave it to me), all you have is shares.
      - s1artibartfast 2y ago
        I think the answer to that question is close zero. The US economy doesn't need more liquidity, and is essentially maxed out. When you add large amounts of liquidity, you get proportional inflation/devaluation destroying the money you have added. Covid Stimulus and related inflation showed how they economy cant even handle hundreds of billions more liquidity in the hands of consumers, let alone tens of trillions. The worker productive capacity doesn't exist to make and sell more stuff, so stocks and real-estate soak up as much liquidity as they can, and inflation takes the rest. If the money in circulation doubled tomorrow, I would expect rent and eggs to double as well, because there isnt actually more stuff. In this way, excess liquidity and associated inflation heavily favors holders of debt, equity, capital, and real-estate. As a well off American, I expect I would be the winner. My house dollar value of my house and 401k would double, while my mortgage would stay the same.

I don’t even directionally have an idea how much is it. Is it like 80% of the current total market value or 8%? My back of the envelope math plus very coarse assumptions lead me closer to 80%.

s1artibartfast 2y ago

To be clear, you are talking about the aggregate for the current holders, understanding that actual cost basis will be different for every person with stock? Some people will have long invest duration with tiny cost basis, some will have cost basis over 100%. My ballpark guess is less than 80%. Most of the stock market is owned by households, either directly through equities, or indirectly through mutual funds and pensions [2, p14] Most individuals and pensions are long term positions, with buying and selling to increase or decrease a position, not buying or liquidating entire portfolios. If I guess the average hold time is ~5 years, that would be a about a 60% basis. US total stock market cap in feb 25' was 67 Trillion, Total market cap in feb 20' was 40 trillion. [1] What conclusion are you trying to draw from it? From an individual perspective, I care more about my cost basis in my market account, than the cost basis for an individual stock. I might have a 95% cost basis my current holding, but a 5% cost basis for my entire account(what I put in the market) https://focus.world-exchanges.org/issue/february-2020/market-statistics https://focus.world-exchanges.org/issue/february-2020/market... https://www.sifma.org/wp-content/uploads/2019/10/SIFMA-Insights-Who-Owns-Stocks-in-America.pdf?utm_source=chatgpt.com https://www.sifma.org/wp-content/uploads/2019/10/SIFMA-Insig...

gizajob 2y ago
I’d hazard that average hold time is much shorter. What makes you say 5 years? My gut tells me that the majority of stocks are held by whales moving them in and out on a constant basis nowadays.
- s1artibartfast 2y ago
  I stated most of my rationale in the post, but I don't think whales buy and sell most of their portfolio. I think they move a tiny portion over and over again.
whatever1 2y ago
I am trying to understand how much the stock market can drop before we destroy realized value (cash). Or how much money is not used in the economy, but rather it is tied to the stock market.
- tacostakohashi 2y ago
  Leaving aside any drops, the entire market cant be sold/liquidated at once at it's current market cap / value. The current "value" / market cap of any given stock / the market is based on whatever tiny fraction of shares traded today.
  - whatever1 2y ago
    Outside the ~ 5 Trillion USD that went to primary market (IPOs, secondary offerings and share issuances) since 1970 and flowed to the actual companies, there is a significant amount of cash that is tied in the secondary market speculating the value of the stocks instead of e.g. providing liquidity to the economy. I am trying to understand how much is that.
    - tacostakohashi 2y ago
      Hmm, not really. If you buy some shares from me for $1000, we settle and I give you the shares and you give me the $1000, and I can spend the $1000 on plane tickets or wine or put it in the bank or whatever, there is no $1000 that is "tied" to any shares. Perhaps you value those shares at $1000 on your balance sheet as their "book value" or "cost basis" or whatever, but the $1000 doesn't exist (you gave it to me), all you have is shares.
    - s1artibartfast 2y ago
      I think the answer to that question is close zero. The US economy doesn't need more liquidity, and is essentially maxed out. When you add large amounts of liquidity, you get proportional inflation/devaluation destroying the money you have added. Covid Stimulus and related inflation showed how they economy cant even handle hundreds of billions more liquidity in the hands of consumers, let alone tens of trillions. The worker productive capacity doesn't exist to make and sell more stuff, so stocks and real-estate soak up as much liquidity as they can, and inflation takes the rest. If the money in circulation doubled tomorrow, I would expect rent and eggs to double as well, because there isnt actually more stuff. In this way, excess liquidity and associated inflation heavily favors holders of debt, equity, capital, and real-estate. As a well off American, I expect I would be the winner. My house dollar value of my house and 401k would double, while my mortgage would stay the same.