U.S. stock market capitalization shrinks

Standard and Poor's World by Numbers report for September 2009 shows a surprising fact that I did not know: the U.S. stock market is only worth 40% of the total world stock market. It wasn't that long ago that the U.S. was worth 60%, and then 50% of the world.

This continues something that we already know: the U.S. is doing well, but several countries are catching up. As the value of the dollar drops, the U.S. share of the world will continue to drop.

For those of us who care about diversification, global diversification is one of the things to diversify across. As the United States loses its pre-eminence, it is necessary to diversify your investment into other countries. To match the world distribution you should now have 40% of your stocks in U.S., and 60% in the rest of the world.

I will be making some more changes to my equity allocations in the new year.