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The total wealth of the USA (2019) is $106 Trillion. [1]

The total market capitalization of US companies is $37.6 Trillion. [2]

Okay, other countries can invest in US markets more than we invest in theirs. But supposing that weren't the case, is it numerically possible for the total market cap to exceed the total wealth? Or is there a limit on how high the total market cap can go?

Edit: I appreciate the answers, but the question was IF the large market cap can't be attributed to investors from other countries, is this possible? In addition, I think the answers are wrong. Consider a country which owns $1mil in total wealth. An IPO happens and 10% of the highly-desirable IPO company is sold to a very rich investor for \$200,000. That pushes the market cap of the company to \$2 mil. Yet the total wealth of the country is only half of that and no foreign investments occured.

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There is no limit, but you would need a lot of large non-residents shareholders to achieve that.

This is arguably the case in Hong Kong, where the total market cap is advertised at 4.5 trillion dollars. I cannot find a source for the total wealth of Hong Kong, but given that ultra high net worth individuals have 1.2 trillion in assets, and assuming they own 90% of the wealth, even adding government reserves (432 billion) it's still a far cry from 4 trillion. Many large companies listed in Hong Kong are Chinese and have close to 0 business in the city (Tencent, Alibaba now, etc.)

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  • $\begingroup$ I believe this answer is wrong; see Edit in the question $\endgroup$
    – doublefelix
    May 2, 2020 at 10:24
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    $\begingroup$ Ok then your question doesn't make sense, if you push the market cap you push the wealth by the same amount as market cap is a component of wealth $\endgroup$
    – Lliane
    May 2, 2020 at 12:55
  • $\begingroup$ I see, so then the way that wealth is counted, even though there were only ever $1mil in the system, because of the IPO of the company, the total wealth is more than that. That's interesting $\endgroup$
    – doublefelix
    May 2, 2020 at 14:07
  • $\begingroup$ @doublefelix: It is possible that you borrow money at a bank to buy shares issued in IPO. The new loan is new money, so money supply increased and so the total wealth. $\endgroup$
    – Martin Vesely
    May 2, 2020 at 16:48
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If only US citizens can invest on US markets, total market capitalization has to be less than total wealth of society because finance investments are only part of total wealth. When you borrow money at a bank for investing on financial market, the market capitalization increases, and so do the total wealth of US citizens.

Total market capitalization can be higher only in case citizens of other countries invest on US market because this create an additional source of money for market capitalization but the total wealth of US citizens do not increase in that case (total wealth of foreigners may increase, however).

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