Stock market valuations fluctuate over time and $ amounts of holdings in the short term can be deceiving.
This got me thinking, what if we instead looked at what % of the stock market your holdings represented instead?
Using VT as our benchmark we can calculate that on 2021-08-31:
- VT closed at $106.61
- It represented 3.10% of AAPL
- AAPL’s market cap was $2.525 trillion
This gives us the results of:
- VT represented a market of $81.45 trillion (total global equities were ~$90 trillion)
- 1 share of VT represented 1/764 billionth of its underlyings
So instead of looking at 100 VT shares as ~$10k we could consider it as owning approximately 1/8bn of total global equities, your “fair share” if everyone on the planet owned an equal amount.
Extrapolating approximately:
- 1000 VT = currently $100k = 1/800m of global equities
- 10,000 VT = currently $1m = 1/80m of global equities
If your intention if long term accrual then consider blocking out the noise of short term $ fluctuations and instead use this framework of accruing an absolute number of shares / % of global equities instead.