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Here is a scary detail, Japan's stock market capitalization over the last twenty five years. Look how it keeps cycling around $4 Trillion. Year Value 198

by npalli 12y ago

Here is a scary detail, Japan's stock market capitalization over the last twenty five years. Look how it keeps cycling around $4 Trillion. Year Value 1988 $3,910,000,000,000 1989 $4,390,000,000,000 1990 $2,920,000,000,000 1991 $3,130,000,000,000 1992 $2,400,000,000,000 1993 $2,999,760,000,000 1994 $3,719,910,000,000 1995 $3,667,290,000,000 1996 $3,088,850,000,000 1997 $2,216,700,000,000 1998 $2,495,760,000,000 1999 $4,546,940,000,000 2000 $3,157,220,000,000 2001 $2,251,810,000,000 2002 $2,126,080,000,000 2003 $3,040,660,000,000 2004 $3,678,260,000,000 2005 $4,736,510,000,000 2006 $4,726,270,000,000 2007 $4,453,470,000,000 2008 $3,220,490,000,000 2009 $3,377,890,000,000 2010 $4,099,590,000,000 2011 $3,540,680,000,000 2012 $3,680,980,000,000

chm 12y ago
Are these current $?
- npalli 12y ago
  All in current USD (2012).
  - apaprocki 12y ago
    FYI the Yen has depreciated against the dollar by ~50% since 2012. (chart: http://imgur.com/3kjJf4I http://imgur.com/3kjJf4I)
mathattack 12y ago
A couple things to note on this: 1) Market cap changes of the stock market doesn't tell much. If a company changes it's capital structure (more or less debt relative to stock, or Private Buyouts) the market cap changes. 2) A better metric would be "Total value of the equity and debt of all the companies" with an equity and debt breakout. 3) Even still, this would miss privately held companies. It also would just measure the asset values, and not ownership.
- npalli 12y ago
  IDK, the original article talked about the stock market. On that exchange, market capitalization is measured and is a proxy for everything going on with public companies. What you are talking about in 1) and 2) is some non-existent market on which total equity and debt with vastly different characteristics is valued on one shot. What exchange do you have in mind here? The only time you fully measure all the effects to calculate the enterprise value is when you are buying the company outright. There are several practical reasons why you don’t measure and trade on the enterprise value of the listed companies. To list a few 1.On the equity side you only know the prices of outstanding shares, how will you value the non-traded shares and options? There is no simple measure to assign the control premium on a single company much less the entire stock market. This doesn’t include debt that might convert to equity on different schedules. 2.On the debt side, debt can be convertible to equity, have different seniority, payment schedule, liquidity and risk profiles. What does a consolidated number tell you? Not to mention off-balance sheet commitments and the fact that debt for some sectors like a financial company might not make any sense. What does the enterprise value of Bank of America even mean? 3.Even valuing cash has problems if you are like a US tech company with billions abroad that might be subject to myriad tax rules. Finally with 3) you talked about private companies, at that point you probably need to look at SOE in China as well. Now you are looking at total wealth and not the stock market.
  - mathattack 12y ago
    Thank you for your comments/thoughts. It's very hard to come up with a lot of these numbers. In the US it's possible to look at the aggregate corporate debt market, but you would still miss some liabilities. It doesn't change the point, though, which is that aggregate "public equity only" analysis doesn't tell you much. (Just like looking only at a company's balance sheet equity doesn't tell you much)
- adventured 12y ago
  That's not true. A company taking on more debt does not automatically alter its market cap. There is no automatic correlation for any given valuation metric, whether we're talking about how high a PE ratio should be, or how debt should be valued when deciding if a market cap is reasonable. Your 1) item rests on the efficient market theory, which is false. It is entirely up to investors - their reasoning and emotion - and it typically varies significantly from one industry to another, and from one company to another. For some companies, taking on debt will not alter the market cap what-so-ever. Apple for example, viewed as an extremely healthy company with massive earnings, can take on debt without it denting their market cap in a negative way.

by npalli 12y ago

chm 12y ago

Are these current $?

npalli 12y ago
All in current USD (2012).
- apaprocki 12y ago
  FYI the Yen has depreciated against the dollar by ~50% since 2012. (chart: http://imgur.com/3kjJf4I http://imgur.com/3kjJf4I)

mathattack 12y ago

A couple things to note on this: 1) Market cap changes of the stock market doesn't tell much. If a company changes it's capital structure (more or less debt relative to stock, or Private Buyouts) the market cap changes. 2) A better metric would be "Total value of the equity and debt of all the companies" with an equity and debt breakout. 3) Even still, this would miss privately held companies. It also would just measure the asset values, and not ownership.

npalli 12y ago
IDK, the original article talked about the stock market. On that exchange, market capitalization is measured and is a proxy for everything going on with public companies. What you are talking about in 1) and 2) is some non-existent market on which total equity and debt with vastly different characteristics is valued on one shot. What exchange do you have in mind here? The only time you fully measure all the effects to calculate the enterprise value is when you are buying the company outright. There are several practical reasons why you don’t measure and trade on the enterprise value of the listed companies. To list a few 1.On the equity side you only know the prices of outstanding shares, how will you value the non-traded shares and options? There is no simple measure to assign the control premium on a single company much less the entire stock market. This doesn’t include debt that might convert to equity on different schedules. 2.On the debt side, debt can be convertible to equity, have different seniority, payment schedule, liquidity and risk profiles. What does a consolidated number tell you? Not to mention off-balance sheet commitments and the fact that debt for some sectors like a financial company might not make any sense. What does the enterprise value of Bank of America even mean? 3.Even valuing cash has problems if you are like a US tech company with billions abroad that might be subject to myriad tax rules. Finally with 3) you talked about private companies, at that point you probably need to look at SOE in China as well. Now you are looking at total wealth and not the stock market.
- mathattack 12y ago
  Thank you for your comments/thoughts. It's very hard to come up with a lot of these numbers. In the US it's possible to look at the aggregate corporate debt market, but you would still miss some liabilities. It doesn't change the point, though, which is that aggregate "public equity only" analysis doesn't tell you much. (Just like looking only at a company's balance sheet equity doesn't tell you much)
adventured 12y ago
That's not true. A company taking on more debt does not automatically alter its market cap. There is no automatic correlation for any given valuation metric, whether we're talking about how high a PE ratio should be, or how debt should be valued when deciding if a market cap is reasonable. Your 1) item rests on the efficient market theory, which is false. It is entirely up to investors - their reasoning and emotion - and it typically varies significantly from one industry to another, and from one company to another. For some companies, taking on debt will not alter the market cap what-so-ever. Apple for example, viewed as an extremely healthy company with massive earnings, can take on debt without it denting their market cap in a negative way.