Historical Overview of the World Equity Market: Growth, Decline, and Rebirth

Dr. William Barclay, World Equity Market Structure

Fin 594 Fall 2011

Some Basic Concepts: I

Stock (share, equity, common stock) an ownership claim on a company that issues the shares
Issued to raise capital May or may not pay dividend Normally carries voting rights to elect Board of Directors Stocks are sold on an initial public offering (IPO) or secondary offering

IPO the first sale of stock to the public by a company (raises capital and allows existing owners to take equity out of the company) Corporate Bonds debt issued by a company to raise capital
Carries preset interest rate Has priority over stock and preferred stock in bankruptcy proceedings

Preferred Stock hybrid between stock and bonds

Has specified dividend rate May be cumulative or non-cumulative Behind bond holders but ahead of common stock holders in bankruptcy

Derivative an asset that is priced on the basis of another product, e.g. stock index futures are priced based on the prices of the stocks in the index
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Some Basic Concepts: II

Bid (buy price) price that someone is willing to pay for a share of stock Offer (ask, selling price) - price at which someone is willing to sell a share of stock Order book (central limit order book, CLOB) all the bids and offers ranked from best to worst
Best bid: highest price available Best offer: lowest price available
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Other Terms: I
Long, go long, long position to buy and thus own an asset
If you buy Bank of Beijing shares you are long the Bank You can be long by buying the asset itself or, often, a derivative product that is priced from the asset, e.g. stock index futures or options

Short, go short, short position to sell an asset that you do not own
May occur by selling short (we will talk about this later in the course) or by selling a derivative product such as a futures or option contract
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Other Terms: II
Bull a person who believes that price of an asset such as stocks will rise
Bulls like bull markets

Bear a person who believes that the price of an asset will decline
Bears like bear markets

Exchange traded fund a fund (e.g. a bundle of stocks) that tracks the prices of its components
The SPY is an ETF that contains all of the stocks in the Standard & Poors 500 Index and thus tracks the index

Mutual Fund a fund that contains a large number of components such as stocks, bonds, etc
Unlike ETFs, (almost all) mutual funds cannot be traded during the day but only on the basis of closing prices of the components

Secondary offering an issue of new stock by a company that is already listed for trading (and previously had an IPO); raises new capital and dilutes existing ownership
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!. Do you own stocks? If yes, approximately how frequently to you trade: 1/wk, 1/month, 1/year
2. Do you think you own more stocks than your parents did at your age? 3. At age 35, what proportion of your assets would you like to have invested in stocks <10%, 10 25%, >25% Why did you choose this amount? 4. What proportion of the population in your country do you think owns stocks <10%, 10 25%, >25% 5 Over the coming 10 year period, what level of return do expect an investment in stocks to achieve? Negative, 0 5%/year, 5 10%/year, 10 20%/year, >20%/year 6. Which stock exchange (SE) is larger: the Tokyo Stock Exchange, the Taiwan Stock Exchange, or the Shanghai Stock Exchange? On what basis did you answer this question? 5/4/2012 Fin 594 - Fall 2011

History of the World Equity Market: An Overview

The Origins in Antiquity? The Rise and Decline of Stock Exchanges
From the 1600s to WWII Key Characteristics of SEs

Post WWII: The Rebirth of SEs

The Established Markets The New Markets

Stock Exchanges Today

Size
Trading value Capitalization IPO values

Another method of Comparing Sizes Turnover Ratios Stock Exchanges: Wealth, Equitization and Stock Ownership

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Rome: The Origins of Equity Markets?

Smith: first entities that look like equity markets appeared in Rome more than 2200 years ago May overstate the reality but the three conditions described are important:
Freely transferable (tradable) capital as a result of wealth accumulation Credit availability (lending of money at interest), use of bank drafts for financing of trade Risk/reward trade off by investors

Was also international in scope non-Roman citizens could participate Fall of Rome ended this early, and limited, development of equity markets
Next 1000 1200 years saw a different type of economy in Europe: capital was fixed (land, livestock, implements), credit little used, no class of investors in part because of Christian religious opposition to buying and selling for profit (doctrine of fair price)

Evidence from early Asia - ??

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The Emergence of Stock Exchanges

Modern form of tock exchanges (SE) first appeared in the 1600s
Established first in countries leading the European exploration and conquest of the Americas, Africa and Asia Netherlands probably had the first functioning SE in Amsterdam; London also an early entry; first in Asia probably Japan Developed in other European countries and European settled colonies

SEs had the same dual function in 1600s and 1700s as today:
Capital raising and allocation, e.g. Br East India CO, Bk of Eng, Hudsons Bay Co, etc) Limited liability for share owners Speculation/investment (and people trying to define the difference)

These early SEs were of limited importance to their economies and citizenry
Financial assets not yet a significant form of wealth Commodity exchanges more common
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The Rise of SEs: 19th Century to the 1930s

By WWI SEs were central to an emerging world financial market:
World wide: 20 million investors held L32.6 billion of public companies (approx 3 trillion in current $) Equity market participation very concentrated
UK 24%, US 21%, France, 18%, Germany 16%, all other 21%

Internationalization of investment already a feature

In UK, France and Germany over 20% of the listings were foreign, often from developing economies (UK>50%)

Two leaders established

London initially the largest SE However, by end of WWI, NYSE larger than London but primarily a market for domestic issues
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Key Features of the Stock Exchanges as Financial Markets

Despite early limited economic role, key features of SEs already apparent
(1) Equitization
Conversion of ownership in commercial ventures into interests (equities or shares) that could be bought and sold
Dutch East India Company organized as a joint stock company

Previously partnerships were the mode of merchant operations

Limits to capital that can be raised No limits to potential losses

Investors are no longer partners and have only limited risk Form of wealth holding begins to change Today initial public offerings (IPOs) equitize a business

(2) Centralization
Information flows to and is acted on at one location (physical/virtual)
What are the advantages of a centralized market?

(3) The importance of information (e.g. N. Rothschild & Battle of Waterloo)

Physical location for purchase and sale of shares when information and communication technology creates geographical constraints
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Key Features of Stock Exchanges as an Organization

(4) Organized, run and governed by members
More like a private club than a business

(5) Time and place advantage of membership

What does this mean?

(60 Not profit maximizing organizations

Why?
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Stocks have reached what looks like a permanently high plateau.

- Irving Fisher, leading US economist, Oct 15, 1929

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The Great Crash of 1929 and its Aftermath

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The Crash of 1929

US market dropped 25% in two days (Oct 24 & 25, 1929 Did the value of stocks drop 25% in two days or the price of stocks? What questions do crashes raise about financial markets?
Are financial markets actually self correcting? Do they reflect rational economic calculations or herd mentality?

Crashes impact the rest of the economy (the real economy) and in turn are impacted by it
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The Decline of Stock Exchanges: The Great Depression/WWII Cycle

DJIA rose >400% from 1921 low to 1929 high
DJIA fell >25% on Oct 24/25 on a then record vol of almost 13 million shares despite NYSE organized bankers pool to support prices By 1932 bottom, DJIA lost 87% of value Not just the US - a world wide bear market:
E.g.Canadas stock market lost almost 80% of pre-crash value, German stock market lost 74% of pre-crash value World stock market as measured by Europe, Australia and Far East Index (EAFE) lost 63%

The 1929 Crash and the Great Depression ended this first wave of SE globalization The impact was global and long lasting
In 1939 NYSE ADV <1,000,000 first time since early 1920s Foreign listings in London dropped to less than 10% of the total The command economy of Nazi Germany and Fascist Italy allocated a minor role to SE; Japans SEs closed In 1928 17% of Harvard Business School grads entered the investment bus in 1940 only 4.4 % did so DJIA net gain 1900 1941: 57% (<2%/yr)

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The Real Economy Impact

In US:
Unemployment went from <3.5% to 25% (1929 1932) GPD dropped over 40% (1929 1932) 9000 banks closed by early 1933

Internationally:
Unemployment jumped and GDP fell (similar to US levels in many cases) Many countries sought to restart economies by creating tariff walls to protect their economy Countries went off gold standard Countries defaulted on sovereign debts

Was the 1930s Great Depression unique, or part of a pattern return to this later
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Dow Jones Industrial Average, Yearly Close, 1900 - 1941

350 300 250

DJIA

200 150 100 50 0

41 19 38 19 35 19 32 19 29 19 26 19 23 19 20 19 15 19 12 19 09 19 06 19 03 19 00 19
DJIA 12/31 CLOSE
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 In the past 60 years, SEs have reemerged

Post WWII: The Re-emergence of SEs

SEs became a core element in financial systems, both at the national and the global level SEs as business in their own right with much recent M&A activity (e.g. NYSE/Euronext, London SE/Italien Borse)

Size of SEs is one simple and impressive measure of this increased importance
One common size measurement is simply volume of trading, i.e. the number of shares that change hands
What are problems of comparison?

SE comparative size is usually measured in two ways

Capitalization of listed companies (shares outstanding * price/share) Value of trading (sum of shares traded * price at time of execution)

By any measure the growth of stock exchanges in the past 35 years have been phenomenal
Capitalization of SE listed companies has increased 18 fold since 1975 However, turnover the value stocks traded has increased 100 fold in the same time period
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Listed Share Volume, 10 Largest Stock Exchanges, 2010 Millions of Shares

2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
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NASDAQ SE NYSE Shanghai SE Nat'l SE - India Shenzhen SE Korea SE Bombay SE London SE

The Worlds Largest SEs, 2010 by Market Capitalization of Listed Issues

$US billions
16000 14000 12000 10000 8000 6000 4000 2000 0 Market Cap
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NYSE NASDAQ Tokyo SE London SE EuroNext Shanghai Hong Kong TSX Bombay BM/Fbovespa Nat't SE - India ASX
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The Worlds Largest SEs, 2010, by Value of Trading of Listed Issues

$US billions
$20,000 $18,000 $16,000 NYSE NASDAQ Shanghai Tokyo SE Shenzhen London SE EuroNext Deutsche Borse Korea SE Hong Kong SE Value Traded
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$US Billions

$14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0

Other Approaches to Measuring Growth of SEs

An original function of SEs was to raise capital for new ventures beyond that which individual or groups of entrepreneurs could aggregate continues to day Therefore one comparative measurement can be capital raised through initial public offerings (IPOs)
Over time the growth rate of capital raised via IPOs is similar to that of market capitalization
However, the total IPO capital raised is only a fraction of total traded value

Increasing reliance on equity capital vs debt

Growth in number of listed companies (over 40,000 listed companies word wide) SEs vs size of economy (national and world comparisons) SEs increased role is also evident via new prominence given to the stock market in news reporting
What did the market due today? always about the stock market
Result has been proliferation of measures of market performance, i.e. stock indexes Both third parties and SEs seek to establish their index as the reference benchmark
Dow Jones, FTSE, CAC, Nikkei, DAX have become household names

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Capital Raised by IPOs, Largest SEs, 2006, 2007, 2008, 2009 and 2010
$800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2006 2007 2008 2009 2010

$US Millions

A us tr

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H on

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B M

bo ve sp B M a E (S pa in ) N A SD Sh A Q an gh ai SE

SE

N YS

SE g al ia

on

Lo nd

K on

/F

SE

24

Days to Raise IPO Capital, 2010

4 3.5 3 2.5 2 1.5 1 0.5 0
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Days to Raise IPO Capital

NYSE NASDAQ Shanghai London BME

Worlds Largest SEs, 2010 by # of Listed Companies

Listings 6000 5000 4000 3000 2000 1000 0

TS BM Lo NA To A Bo NY K N ky ust ore at'l n X m SE S A ra G ba o a (S don DA rp lia SE SE y pa Q (In SE in di * ) a) *Dual with NSE

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Comparing Equity Market and Economic Growth

Figures for growth of capitalization one measure of equitization are impressive as are figures on value of trading (turnover) However, world economy has also grown during this 30 year period Is growth in stock market activity simply a reflection of the increase in economic activity? How can we compare? Use World GDP as base and compare to stock market activity
Early 1990s vs a decade later

Why has the latter exceeded the former?

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Growth in the World Equity Market vs Growth in World GDP, 1975 - 2009
Market Cap and Value Traded vs GDP
120000 100000 Value Traded 80000 & Mkt Cap 60000 ($ billions) 40000 20000 0

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19 75 19 80 19 85 19 90 19 95 19 97 20 02 20 05 20 06 20 07 20 08 20 09
Year Market Cap Value Traded World GDP
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Analyzing the Re-Emergence of Stock Exchanges:I

The re-emergence of SEs can be divided into two parts:
The first trend is a return to importance of older, established equity markets
US, UK, Germany, France and Japan that were leaders in shareholding by WWI
NYSE and NASDAQ, LSE, Euronext, Deutsche Borse, and Tokyo SE

These are the largest SEs and account for much of the total world equity market capitalization and value of trading Also leaders in IPO issuance to raise additional capital

In addition, these SEs are increasingly reorganizing as for profit entities and acting as for profit businesses seeking growth
Mergers of SEs in Europe to create EUREX, NOREX and EuroNext, NYSE/Euronext merger, NASDAQs failed bid London SE, Dhubai SE bid to acquire part of NASDAQ, etc.
Return to SE M&A later in the course
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Growth in Market Capitalization, Six Established World Markets

(1980 - 2010)
$18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0
19 80 19 90 19 95 19 98 20 00 20 02 20 04 20 06 20 07 20 09 20 10

NYSE NASDAQ TSE London DB EuroNext

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$ Trillions

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Growth in Annual Value of Trading, Six Established World Markets

(1980 2010)
$35.0 $30.0
$ Trillions

$25.0 $20.0 $15.0 $10.0 $5.0 $0.0

19 80 19 90 19 95 19 98 20 00 20 02 20 04 20 06 20 07 20 09 20 10

NYSE NASDAQ TSE London DB EuroNext

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Established Markets Changing Share of World Equity Market

These markets are largely the same as those cited in our analysis of early 20th century equity market participation
A long history of equity trading and equitization

Is this simply a recreation of that earlier pattern or has equitization and thus stock market activity spread to other areas of the world? Examine established market share of world equity market over time points to the second trend that accounts for growth in the post-WW II world equity market Dispersion of equity market cap and trading share out of established markets is primarily a trend of the past 25 years
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World Equity Market Share, Top 6 Established Markets

100% 90% 80% 70% 60% 50% 1975 1980 1985 1990 1997 2002 2006 2009 2010

Mkt Cap Share

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Traded value Share

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The Re-Emergence of Stock Exchanges:II

The second trend is the founding and growth of SEs in new equity markets
Many new SEs established in 20th century and especially after WWII Include: Shanghai, Taiwan, S. Korea, Thailand, Indonesia in Asia as well as Mexico, Chile and Brazil in Latin America These markets are smaller as measured by capitalization and value traded than the older SEs but many are growing rapidly
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Leading New Markets

Exchange
Istanbul SE Bombay SE Mexican Bolsa Korea SE Shanghai SE Shenzhen Taiwan SE

Founded
1929/1986 1875 1985 1956 1890s/1990 1990 1962

Trading Value, 2006 ($USb)

$224.6 $215.0 $96.3 $424.5 $1,339.6 $738.8 $423.7 $737.7

Capitalization (2006, $USb)

$182.3 $818.8 $348.3 $774.1 $834.4 $917.1 $277.9 $594.5

National SE (India) 1992

Stock Ex of Thailand
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1962/1975

$100.6

$140.2

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Leading New Markets

Exchange
Instanbul SE Bombay SE Mexican Bolsa Korea SE Shanghai SE Shenzhen Taiwan SE

Founded
1929/1986 1875 1985 1956 1890s/1990 1990 1962

Trading Value, 2010 ($USb)

$411.5 $258.7 $119.1 801.0 $1,607.2 $4496.2 $3572.5 $903.1

Capitalization (2010, $USb)

$307.0 $1,631.8 $454.3 $1,596.6 $1091.9 $2,716.5 $1,311.4 $597.2

National SE (India) 1992

Johannesburg Stock Ex
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1962/1975

$340.0

$925.0

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Emerging Markets
There is also a third group of markets that have developed in the past 3 decades emerging markets
These include Eastern Europe: Poland, Hungary, Czech Republic Also Africa: Egypt, Malta, Iran

A large number of new SEs in emerging markets but still a small portion of market capitalization and traded value
Future growth? Impact of 2008 world market collapse?
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Change in Market Capitalization Rankings, 1999 2009

20 Largest Markets based on 2009 Mkt Cap
1999 US UK Japan France Canada Australia Germany Switzerland China Brazil 1 3 2 5 8 13 4 6 43 19 2009 1 2 3 4 5 6 7 8 9 10

Spain
S. Korea Italy Taiwan Netherlands Swede India Hong Kong S, Africa

11
15 9 17 7 12 21 14 18

11
12 13 14 15 16 17 18 19

Russia

32

20

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Comparing SEs: Turnover Ratio

(Combines Market Capitalization and Value Traded)
Our different measures of exchange size produce different rankings. This is true of the most widely used measures, market cap and trading value.
Can we combine these measures to compare stock exchanges? What would a combined measure mean?

Traded value and market cap can be combined to create a measure of market activity called the turnover ratio How to calculate turnover ratio: traded value divided by market capitalization (TV/MCap)
Traded value usually an annual measure Market Cap usually as of close of the year

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Turnover Ratios: Comparing Exchanges

Calculation examples:
In 2009, total traded value on Shanghai SE was $5,062 billion while year end market capitalization was $2,705 billion
What was the turnover ratio for the Shanghai SE in 2009?

In 2009, total traded value on the Shenzhen SE was $2,774 billion while year end market capitalization was $868 billion
What was the turnover ration for the Shenzhen SE in 2009?
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What does the Turnover Ratio Measure?

Turnover ratio frequency with which the average share trades
Turnover ratio of >1 means the average share is traded at more than ___ per year; Turnover ratio of <1 means the average share is traded less than _____ per year

Can be used to compare activity levels in markets of different sizes

A first insight into equity culture in a particular country High overlap between exchanges in top 10 by market cap and traded value less overlap with turnover ratio
4 SEs ranked in top 10 on this measure are not in top 10 on either of the other two measures (Istanbul, Oslo, Borsa Italiana, Taiwan SE)

On a world wide basis this same calculation can be made over time to assess shift in activity

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Ten Most Active SEs, 2005 2009 (listed issues, 2005 as benchmark)
450 400 350 300 250 200 150 100 50 0

Turnover %

*In 2008 & 2009 NASDAQ included trades in non-NASDAQ listed stocks; the actual turnover ratios are estimates

2005 Turnover Ratio 2008 Turnover Ratio

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A N

E ) YS ain N Sp na E M lia B Ita sa or se B or se B or o B sl e O ch ts eu D SE ea SE or K en zh en * Sh Q A SD

2006 Turnover Ratio 2009 Turnover Ratio
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2007 Turnover Ratio

nb ta Is

SE an iw SE Ta ul
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Growth of the World Equity Market, 1975 2010 Billions of $US

$120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0

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19 75 19 80 19 85 19 90 19 95 19 97 20 02 20 05 20 06 20 07 20 08 20 09 20 10
Market Cap Value Traded
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Stock Exchanges: Wealth and Financialization

The Changing Structure of Wealth Holding

Equities and Wealth

What is Wealth? What is net wealth? How does wealth differ from Income?

What are some forms of wealth?

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Equities as Wealth
What are the advantages of holding wealth in the form of equities?

What are the disadvantages of holding wealth in the form of equities?

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Financialization: The Holding of Wealth Transformed

Re-Emergence of SEs part of a larger process of financialization:
Increased importance of financial markets, financial institutions, financial modes of thinking and financial elites in larger economy Financialization transforms future streams of income (profits, dividends, interest payments) into tradable assets
E.g. future earnings of business transformed into equities that may be bought and sold E.g. loans, whether private or government, transformed into bonds that may be bought and sold

Process of this transformation requires larger finance sector to structure and securitize assets into financial assets
Can financialization
May be one problem revealed by 2008 financial crisis

Measures of financialization in the US:

Ratio of equity assets to total GDP on a per capita basis Total US debt (government, households, and business) rose from 1.6 times GDP in 1973 to 3.5 times GDP in 2007
Debt of financial sector was the fastest growing component

Profits of financial sector were only 14% total corporate profits in 1981 vs 40 - 45% in 2000 05

Similar trends occurred in other nations: outcome is increased holding of wealth in the form of financial assets including stocks
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Direct and Indirect Ownership

What is direct ownership (participation) in equity markets?
Individual invests via a broker-dealer, choosing (perhaps with advice) stocks and/or equity funds Increased orientation to stock market what did the market do today? has a meaning

What is indirect ownership?

Via an institutional intermediary E.g. mutual fund, pension fund, trust

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Equities and Household Financial Wealth

Financial wealth excludes real estate, including primary residence Household wealth has shifted towards financial wealth Within financial wealth, trend is towards growth in percent of household wealth in equities
Increases in the order of 25 - 50% during the 1990s were not uncommon UK exception 1980s privatizations already distributed shares widely
These are maximum figure because may include some bond mutual fund holdings
US & Europe from different data sources comparability vs trend

We will analyze the impetus behind this shift later in the course

These are average figures for all households

Distribution of wealth among households is uneven; wealthy households (top 20 35% by wealth) hold a disproportionate share of total financial wealth These top wealth holding households are more likely to hold equities
Discuss in greater detail when we examine equity culture
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Share Owning Population, Selected Countries

Percent of Population Owning Shares, ca 2000-2005
60% 50% 40% 30% 20% 10% 0%
A t us lia ra an Fr Ja N H U S. a re Ko C a an da er G y an m ed Sw Ta U ew g on S K n pa iw ce Ze an al d an en K g on

Direct Ownership
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Total Ownership
50

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Equitization: US as a Case Study

What is equitization? How can we measure equitization?
Growth in number of listings
An indication of commercial participation in equity market Problem of counting all listings as equivalent

Growth in market capitalization

Good measure of market growth Problems: population growth could increase market cap Economic growth should increase market cap

Control for population and economic growth by comparing market cap to GDP on a per capita basis
US: growth in GDP/capita and market cap/capita parallel until early 1990s new pattern emerges as equity market becomes more important mechanism for wealth holding and creation
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US Equitization: Per capita GDP vs Per Capita Market Cap, 1980 - 2008
$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0
19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08

GDP Per Capita

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Per Capita Market Cap

52

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Equitization: Another Measure

A broader measure of equitization may help us in comparing markets
Market capitalization:GDP ratio Suggests:
Range that is found in world equity market today Possible trends in markets over the next few decades

Broadly, older markets have higher ratio but this is not universal
E.g. Taiwan very high ratio Germany and Japan lower ratios May reflect differences in equity cultures to be discussed later in the course
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Comparing Market Capitalization to Gross Domestic Product: 2009

2 1.8 1.6 Germany Japan Thailand China Spain S. Korea India US France Australia Canada UK Taiwan
54

Mkt Cap/GDP

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009 Ratio

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SEs and the Investing Public

A major reason for, and result of, increased prominence of SEs is the increase in equity market participation by populations around the world
Until more than a decade after WWII, only a small percentage of individuals n any country owned stocks (e.g. WW I figures) Wealth was primarily in real estate, small business, bank accounts and bonds In the last 4 5 decades this has changed dramatically: SEs have become important, directly or indirectly, to the financial well being of most people

This fact alone, the growth in the (direct and indirect) investing population, would be reason to study the structure and operation of SEs A growing percentage of the accumulated wealth of individuals and institutions (these are often proxies for individuals) is now in the form of equity assets
Current well being and future life style Driving continued equitization and benefiting from this process However, holding wealth in the form of equities is still available to only half (or often less) of the population in most counties

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Evolution of Equities as a Percent of Household Financial Wealth,

US and Selected European Countries
35% 30% 25% 20% 15% 10% 5% 0%
an Fr ce U er G y an m Ita ly N h et la er s* nd U K S

*Netherlands date are 1995 and 1998

1990
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1998
56

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What do we, as Investors/traders/wealth accumulators Expect from SEs?

The stock exchange should be neutral what does this mean?
Neutral: No preference for any participant in the operation of the market
Neutrality essential for confidence/trust of investors Neutrality essential for role as regulator

Neutral: the SE should not participate in the core activity of trading

Differs from banks, brokerage houses, etc. SE revenues cannot be derived from direct participation in their core activity

Analogy: a referee in a sports contest

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 Equitization

Terms

Stock Market Capitalization Value of trading IPO Turnover Ratio Direct vs indirect stock ownership Wealth and Net Wealth Other basic concepts appear on the following slides please be familiar with them

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