Wilshire 5,000 vs US GDP

The Wilshire 5,000 captures the market capitalisation of all equity securities trading in the United States. Historically comprised of approximately 5,000 names, currently there are just under 3,500 equities listed in the Index. The Wilshire 5,000 Index has a market capitalisation today of approximately $29 trillion. The Index sports a trailing price/earnings ratio of 26 times and a price/book ratio of 2.7 times, historically at the extreme end of the valuation range. The size of the US economy by comparison is approximately $20 trillion. So, the Wilshire 5,000 is now 1.4 times the size of the US economy, the most elevated relative valuation since records began in the 1970's. As the Federal Reserve increases interest rates and moves from QE to QT, it will be fascinating to watch the knock on impact on both equity securities and the US economy.

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