One portion of our Chicago Quantum Net Score model analysis is to look at the total market capitalization of all the stocks that pass data validation each day.

Today, 2,984 stocks made the cut, down daily by 8 then 3, and down 36 from two weeks ago as some stocks must have delisted or seen low/no volume on a single day.

The total market capitalization of stocks at market close on October 3, 2023 is $49.0 trillion. The market capitalization on October 3, 2023 was $47.7, and October 2, 2023 was $49.3 trillion. Yesterday the total value of our relevant stock universe rose $1.4 trillion after falling $1.6 trillion.

$47.661T (market cap Oct 3 close)
$49.028T (market cap Oct 4 close)
-$1.367T (the difference a day makes)
-0.0287% (percentage difference).

We have noticed that the main US equity exchanges don’t show the same size movements.
SPY up 0.0%
QQQ up 0.2%
IWM up 0.3%

This feels very important to us. The typical stock investor gained 1.4% yesterday. They made money, but the indices they see were flat. There is a disconnect here. However, the index holders are sitting safer and more secure with smaller movements. This is usually thought to be due to the power of market capitalization weighting of stock portfolios, but it could just as well be due to the lack of coverage of most stocks. The most popular, profitable and followed stocks just do better than the rest (our hypothesis).

We did run an analysis a months or so ago that showed that only investing in profitable stocks with low debt ratios avoided the edge over the S&P 500 equity index ETF, SPY, so maybe the biggest losers yesterday were in money losing companies most exposed to debt servicing costs. Time will tell.

We also look at the annual change in the stock price, adjusted for dividends, for the three major U.S. Equity Indices for the past year, and the risk-free rate of return we use for our model (typically the 3-month or 6-month US Treasury bill yield).

Riskfree rate = 5.60%
Actual SPY return = 17.61%
Actual IWM return = 2.82%
Actual QQQ return = 32.02%
Expected market return = 8.94%

The way you figure out the expected total return* is to add up the riskfree rate and the expected market return to risk, and this comes out to 14.54% for the next year.

So, while you drink your morning coffee and get ready to start your day, think about how the totality of stocks is now worth 1.4% more than it was the day before, but how the expected return to stocks over the next year is 14.54%.

Today, Friday, the U.S. equity markets were up sharply, with major indices up over 1%.

The woods of Lake County, Illinois



US Advanced Computing Infrastructure Inc.

Jeffrey Cohen, President, US Advanced Computing Infrastructure, Inc., d.b.a. Chicago Quantum (SM).