Global GDP Share vs. Equity Opportunity Set

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The following chart shows the world GDP share between the US, other developed and emerging markets and the global equity investment opportunity set. The US accounts for just 15% of the global GDP but over 31% of firms over $5 billion in market capitalization in the world are US-based. This is because many of the world’s highly successful firms are located in the country especially in the tech sector. Even in other sectors such as basic commodities like coffee, Starbucks Coffee(SBUX) dominates the world. The other point to remember is the universe of international stocks is huge as they are home to 69% of companies with over $5 billion market caps. So for investors looking to diversify globally there are plenty of companies available to invest in foreign markets.

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Via Bourbon Financial Management

Disclosure: No Positions

Comparing Yields on Australian Stocks, Bonds and Term Deposits: Chart

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Australia is one of the top countries for high dividend yields for stocks. Dividend yields are high in Australia due to the concept of franking which basically prevents dual taxation of dividends to both the company and the individual investor receiving the dividend.

When compared to other asset classes also Australian stocks have better yields. For instance, bonds yields less than 1% while stocks pay 5.7%. Similarly the 1 year rate on bank term deposit is just 1.65%.

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Source: Plunging bond yields & weak share markets amidst talk of recession – what does it mean for investors? by Dr Shane Oliver, AMP Capital

Dr.Shane notes in the above piece that stocks are even cheap relative to bonds due to recent price declines. From the article:

Finally, the decline in bond yields is making shares relatively cheap. The gap of 4.8% between the grossed-up dividend yield on Australian shares of 5.7% and the Australian 10-year bond yield of 0.94% is at a record high. Similarly, the gap between the grossed-up dividend yield and bank term deposit rates of less than 2% is very wide. In other words, relative to bonds and bank deposits shares are very cheap which should see them attract investor flows providing we are right and recession is avoided.

Knowledge is Power: Top 10 Global Dividend Payers, German Economy, Singapore Stocks Edition

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The S&P 500 is up by about 13% YTD. Greece has become one of the best performing markets this year with Athens Stock Exchange General Index soaring nearly 36%.

Over 32 people are dead in mass shootings in 2 days this month. Instead of focusing on important things, we have already moved on to buying Greenland. Somewhere in the internet it was mentioned that this buy is to acquire great mineral deposits. Well if we really need great natural resources first we have to buy Canada and then Australia. Finally we have to buy the ultimate resource-rich nation – Russia. Putin may be more than happy to do a deal on our terms. After all these acquisitions, if China offers a even better deal we might as well sell ourselves to China. And then all this trade war drama will be unnecessary. 🙂

With that prediction, here are some interesting reads for the weekend: