Market Highs Lead to Market Size

April 8, 2021

With the market recently hitting new highs yet again, we sometimes forget to look at another aspect of what new highs mean, size. These days the number “trillion” is thrown around with regularity. Yet our minds don’t comprehend a trillion easily. For context, one trillion dollars is enough to stretch from the earth to the sun3! On that note, the true size and scale of total invested dollars in the global marketplace may also be mind-numbing.

Stock Market

To start with stocks, the entire global stock market value sits at $63 trillion1, with the US market contributing $34 trillion1, or 54% of the global market. The US stock market represents a lot of the American entrepreneurial spirit, and not only is our market big, so are our companies. Consider this: the five largest public US stocks (Apple, Amazon, Microsoft, Alphabet, and Facebook) alone represent roughly $7.5 trillion2 dollars of market cap and are larger than any other country’s stock market.

It was just recently when these companies hit this trillion-dollar level, first when Apple surpassed $1 trillion in the summer of 2018. Since then, Microsoft, Amazon, and Alphabet (Google) have joined the club, and Apple has just gone on to add another trillion in just a couple of years!

Source: YCharts. Data from 1/1/2021 through 3/31/2021

Market performance to new highs has created the size of the market we see now. To see how much it has grown, think back to the great recession of 2007-2009, where the US stock market was valued at $11 trillion and the global stock market at $23 trillion at the end of 2008. Since then, the global stock market has grown by over 174%, driven primarily by the US recovery and expansion in the decade since.

Bond Market

Size is not just confined to the stock market. The bond market is often put in the backseat during investment discussions. However, surprisingly to many, it’s larger. The global bond market is roughly twice the size of the global stock market, checking in at an estimated $106 trillion1 dollars.

Different from how the stock market grows (through performance and new companies entering the market), the bond market grows mostly from issuance (i.e., I need you to lend me more money). Bonds are issued by a government entity or company. This would be considered the primary market – purchasing a bond from the direct issuer of that security. However, most bonds tend to trade hands from time to time throughout the bond’s life. As a result of the different characteristics of each bond (maturity, credit rating, and the interest rate environment), many investors have often referred to the bond market as the “wild west” with the complexity and confusion that may arise from buying/selling on the secondary market. This shows up even more in a bond market environment like today, with rising rates pointing out not all bonds are created equal.

To break down the bond market, out of the $106 trillion globally, roughly $41 billion1 (or 39%) is issued from US-based government or corporations. Different from the stock market, where the majority of assets are in the US, the majority of bonds are issued outside the US. Roughly 2/3rds of all bond dollars are issued by country/local governments or agencies. In the US, this would consist of US Treasury bonds, state or local government municipal bonds, or government agency-backed securities (such as Fannie Mae and Freddie Mac).

Below is a graph breaking out the different categories of US-based bonds1.


Corporate bonds, which are taxable, represent roughly 25% of the US bond market. One area of focus for US-based investors (due to the tax-exempt nature) is the municipal bond market, sitting at roughly $4 trillion1 total. Sometimes investors assume municipal bonds are not a large part of the market or not diversified. However, the muni market is huge and checks in at twice the size of the German stock market!

Global stock and bond markets are evolving each day. With the events of the past year, both the stock market and bond market continued to grow, although for different reasons. Governments and companies issued more bonds to pay for stimulus programs, helping weather the pandemic storm and taking advantage of low rates. While investors proved resilient by piling dollars back into stocks, leading the global stock market to an above-average return from a historical perspective. Going forward, both of these markets, based on sheer size, continue to play a central role in any well-positioned portfolio, with stocks providing more upside with more risk and bonds providing more stability with less return.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Future performance of any investment or wealth management strategy, including those recommended by Balasa Dinverno Foltz LLC (BDF), may not be profitable, suitable for you, prove successful, or equal historical indices. Historical indices do not reflect the deduction of transaction, custodial, investment management fees, or fund fees, which would diminish results. Any historical index performance figures are for comparison purposes only and client account holdings will not directly correspond to any such data. BDF clients must, in writing, advise BDF of personal, financial or investment objective changes and any restrictions desired on BDF’s services so that BDF may re-evaluate its previous recommendations and adjust its investment advisory services. BDF’s current written disclosure statement discussing advisory services and fees is available for review at or upon request.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from BDF.

1 – Data from 12/31/19

2 – Data from 04/01/21

3 –