2  Assets

2.1 Introduction

TODO: What are the investments we can hold?

2.2 Asset classes

• stocks: individual stocks, ETFs, mutual funds
• bonds: treasuries, corporate bonds, municipal bonds
• real estate, REITs
• commodities, metals
• cryptocurrency
• collectables

Figure 2.1: Investment returns for asset classes by decade (source: awealthofcommonsense.com).

Figure 2.2: Investment returns for asset classes by year (source: themeasureofaplan.com).

2.3 US sectors

There are 11 sectors in the standard classification by MSCI, see Table 2.1.

Table 2.1: The 11 sectors in the standard classification by MSCI. Classification of super sectors by Morningstar Stock Sector Structure (2011), where C=Cyclical, D=Defensive, S=Sensitive. Market cap data is from this blog (2024).

#	Sector	Super Sector	Market Cap [T$]	Market Cap [%]	Largest Co	Co share [%]	Vanguard ETF
1	Technology	S	15.3	31.7	Microsoft	22.3	VGT
2	Financials	C	6.1	12.7	Berkshire	12.9	VFH
3	Healthcare	D	5.6	11.6	Eli Lilly	13.5	VHT
4	Discretionary	C	4.9	10.2	Amazon	38.8	VCR
5	Communications	S	4.6	9.5	Alphabet	25.8	VOX
6	Industrials	S	3.9	8.1	GE Aerospace	4.7	VIS
7	Staples	D	3.0	6.2	Walmart	14.7	VDC
8	Energy	S	1.7	3.5	Exxon Mobil	30.9	VDE
9	Real estate	C	1.1	2.3	Prologis	10.5	VNQ
10	Utilities	D	1.0	2.1	NextEra	14.0	VPU
11	Materials	C	1.0	2.1	Linde	21.4	VAW

2.4 Stock market is not the economy

• Small businesses employ nearly half of the American workforce and represent 43.5% of America’s GDP.
• Only 13% (2,790) of US companies with over $100 million in revenue are publicly traded.
• Schlingemann, F.P. & Stulz, R.M. (2022). Have exchange-listed firms become less important for the economy? ¹
• Riley, N.J. (2021). The equity market and GDP: Less linked than you might think.
• Private equity is becoming more influential.

¹ Schlingemann & Stulz (2022).

2.5 Global stock markets

• TODO

Schlingemann, F. P. & Stulz, R. M. (2022). Have exchange-listed firms become less important for the economy? Journal of Financial Economics, 143, 927–958.