Any charts or stats that show total amount of investable capital?

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Tigermoose
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Any charts or stats that show total amount of investable capital?

Post by Tigermoose » Sun Aug 14, 2016 8:21 am

I have been hearing and myself thinking that there is an excessive amount of capital available for investment, and that is one major reason why asset prices for both bonds and stocks are both at all time highs.

Can someone point me to some numbers or charts (preferably) that show the amount of capital available for investment in the world?
Institutions matter

Whakamole
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Re: Any charts or stats that show total amount of investable capital?

Post by Whakamole » Sun Aug 14, 2016 9:02 am

It sounds like you want some numbers about the money supply, specifically the equivalent of M2:

http://www.investopedia.com/terms/m/m2.asp
M2 is a measure of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.
M2 for the US can be found here: http://www.tradingeconomics.com/united- ... -supply-m2

Tigermoose
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Re: Any charts or stats that show total amount of investable capital?

Post by Tigermoose » Sun Aug 14, 2016 8:34 pm

Whakamole wrote:It sounds like you want some numbers about the money supply, specifically the equivalent of M2:

http://www.investopedia.com/terms/m/m2.asp
M2 is a measure of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.
M2 for the US can be found here: http://www.tradingeconomics.com/united- ... -supply-m2
Does M2 include stocks and bonds?
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Phineas J. Whoopee
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Re: Any charts or stats that show total amount of investable capital?

Post by Phineas J. Whoopee » Sun Aug 14, 2016 8:40 pm

Tigermoose wrote:...
Does M2 include stocks and bonds?
No. M2 includes what Whackamole said it does, as documented by the link Whackamole provided, which among other things speaks of mutual funds but not the underlying stocks and bonds directly. Any individual stock or bond may easily be far less liquid, therefore far less near-money, than a fund including many different securities.
PJW

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Epsilon Delta
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Re: Any charts or stats that show total amount of investable capital?

Post by Epsilon Delta » Sun Aug 14, 2016 9:28 pm

Phineas J. Whoopee wrote:
Tigermoose wrote:...
Does M2 include stocks and bonds?
No. M2 includes what Whackamole said it does, as documented by the link Whackamole provided, which among other things speaks of mutual funds but not the underlying stocks and bonds directly. Any individual stock or bond may easily be far less liquid, therefore far less near-money, than a fund including many different securities.
PJW
As I understand it M2 does not include all mutual funds. It includes mutual funds that resemble time deposits, so includes Vanguard Prime Money Market, but not Vanguard Total Stock Market. Not sure where they draw the line for things line Ultra Short Term Bond Fund, Limited Term Tax Exempt et. al.

M2 is currently about 13 Gbucks. US mutual fund assets under management are 15 Gbucks, so M2 can't include them all.

Tigermoose
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Re: Any charts or stats that show total amount of investable capital?

Post by Tigermoose » Sun Aug 14, 2016 9:37 pm

Phineas J. Whoopee wrote:
Tigermoose wrote:...
Does M2 include stocks and bonds?
No. M2 includes what Whackamole said it does, as documented by the link Whackamole provided, which among other things speaks of mutual funds but not the underlying stocks and bonds directly. Any individual stock or bond may easily be far less liquid, therefore far less near-money, than a fund including many different securities.
PJW
Then this is not the information I was looking for, sorry if I wasn't clearer in my original post. I want to know the amount of capital available, even if that capital is currently invested in stocks and bonds, along with all other capital found in measures such as M2.
Institutions matter

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Phineas J. Whoopee
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Re: Any charts or stats that show total amount of investable capital?

Post by Phineas J. Whoopee » Sun Aug 14, 2016 9:42 pm

Epsilon Delta wrote:...
As I understand it M2 does not include all mutual funds. It includes mutual funds that resemble time deposits, so includes Vanguard Prime Money Market, but not Vanguard Total Stock Market. Not sure where they draw the line for things line Ultra Short Term Bond Fund, Limited Term Tax Exempt et. al.
...
Right. Wikipedia, as opposed to Investopedia, specifies:
Wikipedia wrote:...
M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).
...
As some say, and whoever them there some are say correctly in that respect, the Fed no longer calculates M3, but the Wikipedia article helpfully also discusses it along with M0, MB, MZM, M4-, M4, and L.

PJW

MIretired
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Re: Any charts or stats that show total amount of investable capital?

Post by MIretired » Sun Aug 14, 2016 9:47 pm

Here's my post I found info on total world market cap, and total world net worth (not guessing how legit it is):

viewtopic.php?f=10&t=196209&p=3000136#p3000136
Total world stock capitalization = about $100T (my round-off guess from report stating $63T in 11/2013)
Total world net worth = $241T http://waitbutwhy.com/2014/03/combined- ... world.html
What Could You Buy With $241 Trillion?
By Tim Urban

What would happen if you sold everything you own, liquidated any investments you have, paid off all of your debts, and withdrew whatever cash you have in bank accounts?

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Phineas J. Whoopee
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Re: Any charts or stats that show total amount of investable capital?

Post by Phineas J. Whoopee » Sun Aug 14, 2016 10:02 pm

Tigermoose wrote:...
Then this is not the information I was looking for, sorry if I wasn't clearer in my original post. I want to know the amount of capital available, even if that capital is currently invested in stocks and bonds, along with all other capital found in measures such as M2.
Sorry, provide a clear definition of what you mean by capital and maybe somebody can look something up for you.

When you say capital, do you include fixed capital owned by businesses without publicly traded stock? Like, for example, machinery owned by private farmers, and home office equipment owned by individual consultants, and car-washing equipment owned by, well, whoever owns that kind of stuff?

Do you include working capital borrowed by means other than commercial paper in public markets?

It's all capital.

PJW
Last edited by Phineas J. Whoopee on Sun Aug 14, 2016 10:16 pm, edited 3 times in total.

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Epsilon Delta
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Re: Any charts or stats that show total amount of investable capital?

Post by Epsilon Delta » Sun Aug 14, 2016 10:11 pm

Tigermoose wrote:
Then this is not the information I was looking for, sorry if I wasn't clearer in my original post. I want to know the amount of capital available, even if that capital is currently invested in stocks and bonds, along with all other capital found in measures such as M2.
Credt Suisse Global Wealth Report 2015 would be one place to look.

What you want is probably in there somewhere. I believe their definition of wealth is investable assets plus real estate, but if you poke around they probably break the two out somewhere. Table 5.1 in the Global Wealth Data book suggests they have the data to do so, you could reverse engineer it if a search fails.

boglerdude
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Re: Any charts or stats that show total amount of investable capital?

Post by boglerdude » Sun Aug 14, 2016 11:47 pm

"I have been hearing and myself thinking that there is an excessive amount of capital available for investment"

There probably is. PE could go to 50 if everyone in the world got excited about stocks. But, waddaya gonna do?

Tigermoose
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Re: Any charts or stats that show total amount of investable capital?

Post by Tigermoose » Mon Aug 15, 2016 9:32 am

Epsilon Delta wrote:
Tigermoose wrote:
Then this is not the information I was looking for, sorry if I wasn't clearer in my original post. I want to know the amount of capital available, even if that capital is currently invested in stocks and bonds, along with all other capital found in measures such as M2.
Credt Suisse Global Wealth Report 2015 would be one place to look.

What you want is probably in there somewhere. I believe their definition of wealth is investable assets plus real estate, but if you poke around they probably break the two out somewhere. Table 5.1 in the Global Wealth Data book suggests they have the data to do so, you could reverse engineer it if a search fails.
Wooohooo! Thanks! This is exactly the sort of thing I was looking for.
Institutions matter

Tigermoose
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Re: Any charts or stats that show total amount of investable capital?

Post by Tigermoose » Mon Aug 15, 2016 9:45 am

boglerdude wrote:"I have been hearing and myself thinking that there is an excessive amount of capital available for investment"

There probably is. PE could go to 50 if everyone in the world got excited about stocks. But, waddaya gonna do?
From looking at the wealth report another poster linked to, it seems that the "excessive amount of capital available for investment" is probably due to wealth inequality. With greater wealth inequality we will see increased stock and bond prices. If wealth inequality decreases, we will see increased prices for goods and services (CPI inflation). It seems that, because of Central bank action in the world, stock and bond prices recovered and have since increased through compound interest gains. The 1% feel secure in having their money invested in stocks and bonds due to this "back-stop" of the central banks. The 99% were saved from a depression, but the growth has been low after the crash, and so we are not seeing much inflation or real growth. As returns eventually stagnate due to high valuations (who knows when that will be) and low yield, the 1% will start looking for other investments to get a return. Hopefully these investments will be productive and not speculative, and will enable wealth to grow for the rest of the 99% as well as the 1%.
Institutions matter

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