This Isn't the '60s All Over Again

The U.S. stock market has held the title of the world's biggest for nearly a century...

Today, the U.S. market makes up about 64% of global market capitalization. It's getting closer to its historical peak of 72% in the late 1960s.

Such a concentrated market spelled disaster back then. As a global recession approached in the '70s, the dominant U.S. market had a lot of room to fall.

It took more than 20 years for the market to fully recover... while other nations like Japan had their time in the spotlight.

So it's no surprise that investors are on edge once again. The U.S. is the undisputed king of global market cap. It seems to be fast approaching the "lost decade" level.

Today, we'll take a closer look at investors' worries – and reveal the key difference between the markets of the 1960s and today.

U.S. market concentration isn't as bad as it seems...

We certainly represent an outsized portion of global market cap. But there's an important factor to consider...

Many of the biggest companies trading in the U.S. aren't actually American.

More and more international companies are choosing to list in the States. Of the 100 biggest companies in the New York Stock Exchange ("NYSE") Composite Index, 55 are foreign.

It's not always because their businesses are U.S.-focused, either. It's because they can access deeper liquidity, higher valuations, and a bigger investor base.

Take energy leader BP (BP.LSE), which we discussed two weeks ago. The London-based oil and gas giant is considering a move to the NYSE to capture a valuation boost.

And BP isn't alone...

Even our global rivals are choosing U.S. markets...

Chinese e-commerce giant Alibaba (BABA) – often called the "Amazon of China" – went public on the NYSE in 2014. It has a market cap of around $335 billion, making it China's second-biggest company.

And one of the world's biggest chipmakers, Taiwan Semiconductor Manufacturing (TSM), has traded in the U.S. since the 1990s. It's valued at more than $900 billion.

These two foreign businesses chose the NYSE for similar reasons to BP. Alibaba and Taiwan Semiconductor alone exceed a combined $1 trillion in market cap.

And all of these foreign companies are contributing to the market's so-called concentration.

The U.S. has led the global financial landscape for decades...

Companies want to be part of the U.S. stock market... whether they're based here or not. That's skewing investors' view.

Sure, the U.S. stock market comprises 64% of global market cap. But that still includes trillions of dollars in international companies. We're not nearly as close to the concentration of the 1960s as it seems on the surface.

The U.S. remains the world's financial hub. It attracts companies and investors from every corner of the world... and the premium valuations that come with them.

Investors have no reason to be alarmed.

Regards,

Joel Litman
March 17, 2025