International Asset allocation: Australian vs International

Does This Make Any Sense? - A Wealth of Common Sense

world GDP broken down by size and region:


Now here’s world population:


So the U.S. has a quarter of economic production but less than 5% of the world population. Pretty impressive.

Now let’s look at the world stock market capitalization by country (based on the Vanguard Total World Stock ETF weights):


Now let’s put all three of these together for the 10 largest economies on the planet:


The biggest outliers here by far are the United States, China, and India.

China’s economy is two-thirds the size of the U.S. economy but has 4 times as many people. Yet the U.S. has a stock market capitalization that’s nearly 16 times larger than China’s.

India has 4 times as many people as the United States but an economy that’s one-tenth the size and a stock market that’s 1/50th the size.

Does this make sense?

Yes and no.