Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Capital Markets Portfolio Composition

Portfolio / Investing Nov 19, 2008 - 01:36 AM GMT

By: Richard_Shaw

Portfolio

Best Financial Markets Analysis ArticleHow has the US structured itself in terms of equities and debt instruments, and how large is each component?

The financial news streams us a constant supply of fragmentary numbers about this or that troubled asset category or rescue package. Since they are all in hundreds of billions or even a few trillions of Dollars, it's hard to get a handle on the relative significance of the numbers.


This article provides the comprehensive scope of equities and debt instruments in the United States.  That can serve as a sort of yardstick to gauge the relative size of other numbers that are tossed around.

According to the September research report from the SIFMA (Securities Industry and Financial Markets Association), as of June 2008, the US capital structure was:

  • Equities 40.6% (proxy VTI)
  • Money Markets 8.2%
  • Municipal Bonds 5.2% (proxy MUB)
  • Other Bonds 46% (proxy AGG).

“Other Bonds” consists of bonds issued by the Treasury, federal agencies, and corporations, as well as mortgage-backed and other asset-backed bonds.  That definition corresponds to the Lehman Aggregate Bond index (all bonds over 12-month maturity, and excluding muni bonds).

The image below from SIFMA breaks it all down.

The total capital value of stocks and bonds in the US, according to SIFMA, was $52.2 Trillion, including $31.0 Trillion (59.4%) of debt instruments.

Other Non-Security Assets:

There are, of course, other major non-security assets not represented in the capital markets pie chart.  Among the most important are bank savings deposits, equity in real estate (not accounted for in REITs), mortgages and other debts not in mortgage-backed or other asset-backed securities, and the equity in privately owned businesses.

One-Year Ago:

As of September 2007, the capital structure of the US was:

  • Equities 43.3%
  • Money Markets 7.0%
  • Municipal Bonds 5.1%
  • Other Bonds 44.6%.

Equities have declined in weight since last September, municipal bonds have remained essentially the same weight, while aggregate bonds and money market funds increased in weight.  That represents a combination of movement away from risk and a reduction in value of equities.

The Bailout Package:

Various accounts put the authorized bailout at as much as $2 Trillion to $3 Trillion. That would be equal to about 6% to 10% of the debt instruments in the US, or 4% to 6% of total equity and debt capital.

Derivatives:

We will be looking for some comprehensive numbers for derivatives (as we suspect the Treasury is too) and will relate what we find back to the equity and debt capital cited in this article.

Gross Domestic Product:

The most recent GDP reported by the Bureau of Economic Analysis is $14.4 Trillion, or about 30% of the equity and debt capital, or about 50% of the debt capital of the US.

Composite of Investors in the United States:

The world at large — domestic and foreign investors; individual and institutional investors — appear to hold or to have recently held an approximate portfolio of US assets in round numbers as follows:

  • Equities 41% to 43%
  • Money Markets 7% to 8%
  • Municipal Bonds 5%
  • All Other Bonds 45% to 46%%

Because of the damage done to the stock market since June, the average US portfolio will undoubtedly be higher in bonds and lower in equities, and perhaps higher in money markets.

That's not a recommendation to you, but it is potentially helpful to know how everybody else is playing the game.

By Richard Shaw 
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2008 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in