Global Stock Market | FASFA & Early Investing

Global equity markets have nearly tripled in size since 2003, climbing to $109 trillion in total market capitalization.

Over the last several decades, the growth in money supply and ultra-low interest rates have underpinned rising asset values across economies.

Given this backdrop, the above graphic shows the size of the global stock market in 2023 based on data from the World Federation of Exchanges (WFE) and the Securities Industry and Financial Markets Association (SIFMA).

With the world’s deepest capital markets, the U.S. makes up 42.5% of global equity market capitalization, outpacing the next closest economy, the European Union, by a significant margin. Here are the world’s major equity markets based on global market cap share as of Q2 2023:

Today, U.S. equity markets total over $46.2 trillion in market capitalization.

Compared to other rich nations, U.S. stocks have often outperformed over the last several decades.

While the U.S. has outperformed in recent decades, it may not mean that it will continue on this trend. Given the structural shifts stemming from growing populations and GDP growth, investors may consider diversifying their portfolios geographically looking ahead.

*From an article titled, “The $109 Trillion Global Stock Market in One Chart,” on Visual Capitalist.

FASFA Season: While October 1 typically marks the start of the Free Application for Federal Student Aid (FASFA) Season, this year will be delayed. A new simplified FASFA is planned to be introduced in December 2023. You can find out more information here. The process and timeline are the same for graduate and undergraduate students.

As a reminder, we are a fan of Ron Lieber’s book, The Price You Pay for College, as an excellent resource on this topic. Ron is a voice of wisdom on this huge, expensive choice. Chapters are short & we’d encourage parents & students to read only the topics that apply to your situation. Let us know if you’d like a copy, and we will send one along.

Business Briefing

• Oil Prices Rise: U.S. crude oil futures rose 3.6% to $93.68 per barrel on Wednesday, the highest level since August 2022. The price of the U.S. benchmark, West Texas Immediate, has jumped more than 30% since June. The surge started in early July after OPEC and allies led by Russia cut supply to a level lower than demand to boost prices. The three-month rally has revived concerns that oil could reach $100 a barrel, although the pace of the increase has slowed in the past week. (The Wall Street Journal)
• Hong Kong Stock Exchange: The Hong Kong Stock Exchange posted a notice Thursday saying trading of China Evergrande shares was suspended. The exchange did not give a reason for halting trade with the Chinese property developer, which continues to struggle with crushing debt. Trading in Evergrande shares had only resumed on August 28 after a 17-month suspension sparked by the company’s debt problems. (Bloomberg)
• One Stop Shopping: You really can buy nearly anything at Costco. On Monday, the store started offering members online health checkups and other outpatient care in partnership with healthcare marketplace Sesame. Members can get an online primary care visit for $29, a checkup with a lab panel and provider follow-up for $72, or an online mental health visit for $79. (Bloomberg)

Early Investing: You know we talk a lot about the benefits of compound interest, and the longer you leave money alone, the greater it can typically grow. Along those lines, we found this chart interesting:

For Late Gen X’ers, there’s obviously quite a gap. However, the Late Millennials opportunity is looking far better for now. The point is it’s never too early to invest.

Recently, the Wall Street Journal ran an article about a 14-year-old who, along with her mom, tended bee hives in their backyard, selling honey locally and saving nearly $5,000. She used the money to fund a Roth IRA, which will grow tax-free for her lifetime. Parents and grandparents can fulfill a crucial role in helping kids learn how to invest in retirement, even as early as elementary school. Once a child earns income, they are eligible to open an individual retirement account, and if the child is under 18, they can open a custodial Roth IRA. In June, Fidelity reported that the number of these accounts grew by 28%, with the average age at 13.7 years old. How are retirement savings conversations going with your family?