Photo by Bruce Tuten
I've been on somewhat of a hiatus from posting original material over the last month or so, but fortunately my friends at Dimensional Fund Advisors have been working hard this summer. Here are a couple of timely articles from Jim Parker in his Outside the Flags series.
In the first piece, Greece is the Word, Jim explores some of the realities of the ongoing Greek melodrama.
“Greece is a smaller economy than Qatar, Peru, or Kazakhstan, none of which currently feature prominently in world news pages. Its economy is about half the size of Ohio in the US or New South Wales in Australia and about a tenth of the size of the UK. Even within Europe, it is tiny, representing only about 2% of the GDP of the 19-nation euro zone.
As a proportion of global share markets, Greece is also a minnow. As of early July 2015, it represented about 0.32% of the MSCI Emerging Markets Index and just 0.03% of the MSCI All Country World Index.
And while its total debt is large in nominal terms and relative to its GDP at about 180%, this still represents only about a quarter of 1% of world debt markets.”
In the second piece, The China Syndrome, Jim looks at the recent extreme volatility in the Shanghai Composite Index.
“While the Chinese stock market is about 30% off its June highs, it nevertheless was still about 70% higher than it was 12 months before, as of late July 2015. As such, much of the pain of the recent falls will have been felt by people who entered the market in the past year.”
Enjoy the rest of your weekend!