Hi every one,

I would like just to confirm that the size of candian bond market is exactly $1,143 trillion as of december 2007 according to the Bank for International Settlements (BIS).

The BIS Quarterly Review reports the data of domestic debt securities, which are divided into domestic securities privately issued and those issued by the governments.

The $1,143 trillion includes:
Government bonds: $734 billion
Financial institutions: $276 billion
Corporate bonds: $132 billion

The size of the Canadian equity market is $2,186 trillion

Your conclusion is correct: the canadian bond market value is roughly half that of the stock market.

However, this is not exactly the case for the US.

As of december 2007
US bond market value: $24,7 trillion
US stock market value: $19,9 trillion

Please note that all these numbers are for domestic debt (i.e., do not include foreign debt, global debt, etc.)

I hope these informations are helpful.

Thanks

According to the World Bank, in 2005 the ratio of Private Bond Market Cap and Public Bond Market Cap to GDP were: 0.288219 0.537686 respectively.
Of note, the ratio for private has been steadily increasing and the public decreasing.

source: Thorsten Beck, Asli Demirgüç-Kunt and Ross Levine, (2000), “A New Database on Financial Development and Structure,” World Bank Economic Review 14, 597-605.

According to Statcan unadjusted actual dollar GDP for 2005 was 1,372,626 (millions).
Source: Statistics Canada. Table 380-0001 – Gross Domestic Product (GDP), income-based, quarterly (dollars x1,000,000)

So, this would give a values (millions):
Private Bond Market Cap (2005) = $395616.8931
Public Bond Market Cap (2005) = $738041.7834

Or roughly a total of 1.1 trillion dollars?

I’ll keep digging…..

You’re also right that the market portfolio, as a “default”, may not be any good for an investor. It is a starting point in asset allocation considerations and the risk level should be adjusted after considering an investors personal situation.

The allure of the market portfolio advice is compelling. You are advised to do the same thing as everyone else. This is comforting when you’re not sure what to do. However, this doesn’t mean that the advice is any good.

Having said that, the book does say that investors should construct portfolio that is more or less risky than the market portfolio depending on their circumstances, tolerance etc.