The other day a friend was telling me the stock market was rigged and that it’s going to $0. I asked him if he knew how much the stock market was worth - he wasn’t sure. So I said what if it was worth $10 Trillion, would you still think it’s going to $0? He said probably not because that’s a huge amount of money.

Well, what about $109 Trillion? Because as of the end of October 2023, that is how much the global stock market was worth. And today, it’s likely much higher after the massive rally we’ve experienced over the last few months. If it’s rigged and going to $0, we probably have much bigger problems.

Out of that $109 Trillion, which countries or regions make up the biggest piece of the pie? That would be the United States - by a long shot. The US stock market makes up nearly half of the value of the entire global stock market due to massive companies like Microsoft, Apple, Nvidia, Amazon, Google, and Meta, which as of today are all worth well over $1 Trillion.

For comparison, there is only one publicly traded company outside of the US worth over $1 Trillion, the oil giant Saudi Aramco in Saudi Arabia. Europe, China, Japan, and India do not have any.

Has the US always made up this much of the global stock market? For the past 10 years it has, but 2023 was a bit abnormal.

Between 2014 and 2022, the US’s average slice of the pie was 38%. In 2023, however, it shot up to 44.9% after the release of ChatGPT and the hype, hopes, and dreams around Artificial Intelligence powered by US corporations.

This brings us to the next question - is 45% a sustainable new level for the US vs. the World, or will the World markets catch up and bring the US back on trend? Let’s see what the charts are telling us.

This Year

The chart above shows the performance of the five largest global stock markets in 2024. We’re only two and a half months in, but interestingly, the US (SPX) is trailing Japan (NKY) and Europe (SX5E). And while Japan, Europe, and China’s (SHCOMP) trendlines are pointing up and to the right, the US’s trendline is starting to turn down.

So what does that mean for the future - and your investment portfolios? Well, perhaps the World markets are starting to catch up and will continue to gain traction vs. the US - only time will tell, but this is why I advocate for globally diversified portfolios.

As always, simply looking at the charts and the directions of the trends can help us prepare for potential outcomes and leverage the strongest trends as they start to take hold.

Thanks for reading!

Brian Bond, CMT