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Old 10-05-2019, 09:43 PM   #1215
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Join Date: Jun 2010
Posts: 9,686
I just don't understand how you can relate national income anything with a stock market that happens to be located in that nation. Maybe (triple underscore) you could cobble something together like that if every, or nearly every, nation has a stock market. But that's obviously not true.

So what's wrong with market capitalization weightings? Toss all the world's investable stock markets into the mix, and you've got a global, reasonably weighted index/fund. If it's "off," it's only off a little. With thousands of stocks, it's just not going to matter if the weightings are "off" deep into the decimal places.

There are some investors who want to overweight stocks below the "large cap" stocks for whatever reasons. There are two Blackrock iShares ETFs that do that: WSML and IEMS. Those ETFs invest exclusively in "Small Cap" stocks. WSML is basically the "small cap" version of IWDA, and IEMS is the "small cap" version of EIMI. The latter has a rather high expense ratio which ought to give you pause.

I'd also add that it's entirely possible, even common, to have a fast growing national economy that has both a moribund (or shrinking) stock market -- we've certainly seen that in many places -- AND locally headquartered businesses that aren't growing very much. It's very possible, even common, to have both global multi-nationals fully (or more than fully) participating in that national economy's growth and "horizontal" expansion in the locally headquartered businesses -- proliferation of more business entities, not necessarily growth in previously established businesses. An awful lot of developing economies experience what I've just described.
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