Author Archive for James Schmitt

1995-2000 - Euphoria in Perspective

Published
by
James Schmitt
on June 29, 2006
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On July 17, 1995 the NASDAQ Index crossed 1,000 for the first time; just 5 1/3 years later, on March 9, 2000 it crossed 5,000. In the period perhaps $12 Trillion of wealth was created in US stocks.

The five following stocks of the era, the ‘nifty five’, grew in market cap by almost $2 trillion during the five plus year period, accounting for 1/6th of this stock wealth creation.
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Microsoft - Wealth Creation Champion

Published
by
James Schmitt
on June 26, 2006
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No stock characterized the wealth creation institutional era more than Microsoft where over $600B in market value was created in just 15 years (1986-2000).
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The Long Term Growth of the US Market

Published
by
James Schmitt
on June 22, 2006
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One of the interesting data sets the Fed Flow of Funds Report provides is the total market value of publicly traded equities on the US market. Year End 2005 data available on-line indicates the value was $18.2 trillion.

In 1980, a quarter century prior, it was only $1.5T, an increase of $16.7T. A pretty good quarter-century of wealth creation for stockholders! In other words, 91.8% of the stock market values was ‘created’ in the last 25-years.

Below are two charts, both representing the value of U.S. stocks from the end of World War II in 1945 to the end of last year. In 1945 the entire US stock market was valued at $117 million ($282m in 1955; $735m in 1965; but only $632m in 1974!).

Note: The y-axis (left side ofchart) on a linear chart is scaled to represent the same dollar value increase regardless of the valuation level; the log chart is scaled so that the same percentage increase moves up the same level on the chart regardless of the valuation level. Log charts should be used when values are viewed over more than a few years. Expressing numbers as a logarithm scales them to allow comparison of their difference over time…$100 to $1000 (1949-1969 approx above) is same as 1000 to 10,000 about 20 years later.

Fed Flow of Funds Statement - An Unseen Treasure

Published
by
James Schmitt
on June 19, 2006
. 1 Comment

For us, perhaps the most comprehensive quantitative financial publication, which also happens to be free and downloadable off the internet, is the Federal Reserve’s Quarterly Flow of Funds Statement. While informative and free, most investors probably have never referenced it. If you haven’t, you should do so.

Even better, all of the data in this publication is available for download into database or Excel format.

The publication is issued quarterly. A wealth of economic data is provided dating back to the Depression when - coincidentally - the government began its collection of statistics. This financial history is sufficiently far enough back even for us!

Print the six back issues available on the web site, you’ll have all of the data from 1945-2004 (1945-54; 1955-64; 1965-74; 1975-84; 1985-1994; 1995-2004), while the last publication on June 8th covers 2001-2003 and the four quarter endings for 2004 and 2005.