Apple Market Cap in Perspective December 19, 2017
Background Spurred by the inclusion of Apple in the DJIA, in 2015, CRSP produced a paper, Is Apple the All- Time Market Cap Champ? At that time, Apple s market capitalization was in the $700 billion region. With Apple reaching a market-cap record in November 2017, CRSP recently revisited this topic, using two proprietary data sets for analysis. 1
Understanding Datasets Available for Analysis Two CRSP datasets are available for analysis Dataset Description CRSP Research Data CRSP US Stock Database CRSP Historical Indexes CRSP US Treasury Database Long history (Dec. 1925 Nov. 2017) Used by Academic Researchers to analyze U.S. Markets Broadest representation of U.S. Markets High accuracy and consistency of data across history CRSP Investment Indexes CRSP US Total Market Presents markets and securities from investor perspective since only includes issues that are considered investable Has a substantial amount of funds (over $700 billion as of 11/30/2017) tracking the index Data begins March 2011 2
: Step 1 Approach Use CRSP Research Data to analyze the size of the company within the historical context Step 2 Use CRSP Investment Indexes to take a look at the difference between theoretical and investor experience 3
Top 20 by Market Cap Unadjusted for Inflation Step 1 Unadjusted for Inflation Rank Company Market Cap ($bn) Earliest Date¹ Averages 1 APPLE INC $903 Nov-2017 2 ALPHABET INC $688 Nov-2017 3 MICROSOFT CORP $655 Nov-2017 4 GENERAL ELECTRIC CO $594 Aug-2000 5 AMAZON COM INC $576 Nov-2017 $683 6 EXXON MOBIL CORP $527 Oct-2007 7 CISCO SYSTEMS INC $524 Mar-2000 8 INTEL CORP $502 Aug-2000 9 BERKSHIRE HATHAWAY INC DEL $478 Nov-2017 10 FACEBOOK INC $437 Nov-2017 $493 11 JOHNSON & JOHNSON $385 Oct-2017 12 JPMORGAN CHASE & CO $365 Nov-2017 13 WAL MART STORES INC $310 Dec-1999 14 PFIZER INC $308 Jul-2000 15 WELLS FARGO & CO NEW $301 Jul-2015 $334 16 BANK OF AMERICA CORP $295 Nov-2017 17 CITIGROUP INC $286 Feb-2001 18 A T & T CORP $270 Mar-2000 19 A T & T INC² $268 Jul-2016 20 ORACLE CORP $261 Sep-2000 $276 Source: CRSP US Stock Database Note: Data as of 11/30/2017 ¹ Refers to the earliest date when the company achieved its highest market cap; note due to trading the company may reach the same closing price on several days resulting in the same total market capitalization ² AT&T Inc. is the company formed after AT&T Corp was acquired by SBC 4
Step 1 ($bn) $1,000 $900 $903 Top 20 by Market Cap ($bn) Unadjusted for Inflation $800 $700 $688 $655 $600 $500 $400 $594 $576 $527 $524 $502 $478 $437 $385 $365 $300 $310 $308 $301 $295 $286 $270 $268 $261 $200 $100 $0 Source: CRSP US Stock Database Note: Data as of 11/30/2017; ¹ AT&T Inc. is the company formed after AT&T Corp was acquired by SBC 5
Top 20 by Market Cap Adjusted for Inflation¹ Step 1 Adjusted for Inflation¹ Rank Company Market Cap ($bn) Earliest Date² Averages 1 APPLE INC $903 Nov-2017 2 MICROSOFT CORP $901 Dec-1999 3 GENERAL ELECTRIC CO $848 Aug-2000 4 CISCO SYSTEMS INC $755 Mar-2000 5 INTEL CORP $716 Aug-2000 $825 6 ALPHABET INC $688 Nov-2017 7 EXXON MOBIL CORP $623 Jul-2007 8 AMAZON COM INC $576 Nov-2017 9 BERKSHIRE HATHAWAY INC DEL $478 Nov-2017 10 WAL MART STORES INC $454 Dec-1999 $564 11 PFIZER INC $440 Jul-2000 12 FACEBOOK INC $437 Nov-2017 13 CITIGROUP INC $402 Feb-2001 14 A T & T CORP $389 Mar-2000 15 JOHNSON & JOHNSON $385 Oct-2017 $411 16 LUCENT TECHNOLOGIES INC $378 Dec-1999 17 ORACLE CORP $371 Sep-2000 18 INTERNATIONAL BUSINESS MACHS COR $370 Jul-1999 19 JPMORGAN CHASE & CO $365 Nov-2017 20 AMERICAN INTERNATIONAL GROUP INC $340 Dec-2000 $365 Source: CRSP US Stock Database; CRSP US Treasuries Database Note: Data as of 11/30/2017 ¹ Monthly CPI-U Index was used to adjust for inflation; CPI-U for November 2017 was assigned the value of 246.669 based on data at www.bls.gov ² Refers to the earliest date when the company achieved its highest market cap; note due to trading the company may reach the same closing price on several days resulting in the same total market capitalization 6
Step 1 ($bn) $1,000 Top 20 by Market Cap ($bn) Adjusted for Inflation¹ $900 $903 $901 $848 $800 $700 $600 $755 $716 $688 $623 $576 $500 $478 $454 $440 $437 $400 $300 $402 $389 $385 $378 $371 $370 $365 $340 $200 $100 $0 Source: CRSP US Stock Database; CRSP US Treasuries Database Note: Data as of 11/30/2017 ¹Monthly CPI-U Index was used to adjust for inflation; CPI-U for November 2017 was assigned the value of 246.669 based on data at www.bls.gov 7
Top 20 by Percent of Total Market¹ (since 1925) Step 1 Data for the period Dec. 1925 Nov. 2017 Rank Company Percent of Total Market¹ Number of Issues in the Index² Earliest Date³ Averages 1 A T & T CORP 12.97% 704 May-1932 2 GENERAL MOTORS CORP 7.94% 584 Mar-1928 3 INTERNATIONAL BUSINESS MACHS COR 6.78% 2,303 Jan-1970 4 DU PONT E I DE NEMOURS & CO 6.02% 1,050 Jul-1955 5 EXXON MOBIL CORP 6.00% 1,065 Sep-1957 7.94% 6 GENERAL ELECTRIC CO 3.96% 729 Apr-1930 7 CONSOLIDATED EDISON INC 3.77% 702 Dec-1932 8 MICROSOFT CORP 3.70% 7,938 Dec-1999 9 APPLE INC 3.19% 6,340 Sep-2012 10 MARATHON OIL CORP 3.02% 724 Dec-1930 3.53% 11 CHEVRON CORP NEW 2.89% 518 Jul-1926 12 CISCO SYSTEMS INC 2.87% 7,884 May-2000 13 EASTMAN KODAK CO 2.84% 2,606 Jul-1972 14 INTEL CORP 2.76% 7,921 Aug-2000 15 U G I CORP NEW 2.59% 702 Dec-1932 2.79% 16 TEXACO INC 2.48% 2,103 Nov-1964 17 R J R NABISCO INC 2.40% 624 Jan-1929 18 UNION CARBIDE CORP 2.40% 801 Dec-1942 19 WAL MART STORES INC 2.36% 6,609 Oct-2002 20 PFIZER INC 2.32% 6,371 May-2003 2.39% Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200) ² Number of issues refers to the number of companies included in the CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index ³ Refers to the earliest date when the company achieved its highest percent 8
Step 1 15.00% Market Cap as Percent of Total Market¹ Dec. 1925 Nov. 2017 14.00% 13.00% 12.97% 12.00% 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 7.94% 6.78% 6.02% 6.00% 5.00% 4.00% 3.96% 3.77% 3.70% 3.00% 3.19% 3.02% 2.89% 2.87% 2.84% 2.76% 2.59% 2.48% 2.40% 2.40% 2.36% 2.32% 2.00% 1.00% 0.00% Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200) 9
Top 20 by Percent of Total Market (since 1980) Step 1 Data for the period Jan. 1980 Nov. 2017 Rank Percent of Total Market¹ Percent of Total Market¹ Number of Issues in the Index² Earliest Date³ Averages 1 INTERNATIONAL BUSINESS MACHS COR 4.44% 6,225 Dec-1985 2 A T & T CORP 4.24% 5,256 Aug-1982 3 MICROSOFT CORP 3.70% 7,938 Dec-1999 4 EXXON MOBIL CORP 3.67% 6,482 Nov-2008 5 GENERAL ELECTRIC CO 3.56% 7,267 Jun-2001 3.92% 6 APPLE INC 3.19% 6,340 Sep-2012 7 CISCO SYSTEMS INC 2.87% 7,884 May-2000 8 INTEL CORP 2.76% 7,921 Aug-2000 9 WAL MART STORES INC 2.36% 6,609 Oct-2002 10 PFIZER INC 2.32% 6,371 May-2003 2.70% 11 AMOCO CORP 1.99% 4,886 Nov-1980 12 ALPHABET INC 1.98% 6,708 Nov-2017 13 CITIGROUP INC 1.94% 7,021 Nov-2001 14 ALTRIA GROUP INC 1.93% 6,696 Sep-1992 15 COCA COLA CO 1.87% 8,692 May-1997 1.94% 16 PROCTER & GAMBLE CO 1.79% 6,482 Nov-2008 17 AMERICAN INTERNATIONAL GROUP INC 1.76% 7,057 Oct-2001 18 JOHNSON & JOHNSON 1.75% 6,617 Oct-2002 19 MOBIL CORP 1.73% 4,761 Mar-1980 20 AMAZON COM INC 1.66% 6,708 Nov-2017 1.74% Source: CRSP US Stock Databases; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200) ² Number of issues refers to the number of companies included in the CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index ³ Refers to the earliest date when the company achieved its highest percent 10
Step 1 5.00% Market Cap as Percent of Total Market¹ Jan. 1980 Nov. 2017 4.44% 4.24% 4.00% 3.70% 3.67% 3.56% 3.19% 3.00% 2.87% 2.76% 2.36% 2.32% 2.00% 1.99% 1.98% 1.94% 1.93% 1.87% 1.79% 1.76% 1.75% 1.73% 1.66% 1.00% 0.00% Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200) 11
Step 1 20% 18% 16% 14% 12% INTERNATIONAL BUSINESS MACHS COR A T & T CORP MICROSOFT CORP EXXON MOBIL CORP GENERAL ELECTRIC CO APPLE INC CISCO SYSTEMS INC INTEL CORP WAL MART STORES INC PFIZER INC ALPHABET INC AMAZON COM INC FACEBOOK INC Top 10 by Percent of Total Market¹ (plus Alphabet, Amazon, and Facebook) Jan. 1980 Nov. 2017 10% 8% 6% 4% 2% 0% 1/2/1980 1/2/1981 1/2/1982 1/2/1983 1/2/1984 1/2/1985 1/2/1986 1/2/1987 1/2/1988 1/2/1989 1/2/1990 1/2/1991 1/2/1992 1/2/1993 1/2/1994 1/2/1995 1/2/1996 1/2/1997 1/2/1998 1/2/1999 1/2/2000 1/2/2001 1/2/2002 1/2/2003 1/2/2004 1/2/2005 1/2/2006 1/2/2007 1/2/2008 1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015 1/2/2016 1/2/2017 Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200) 12
CRSP Investment Indexes Step 2 Goal of CRSP Investment Indexes: CRSP s investable, real-time indexes strive to blend advancements in academic research with current commercial practice in a fundamentally sound manner and under the premise that an index must reflect the way that money managers actually invest To achieve the above goal, CRSP Investment Indexes filter out securities that don t meet investability criteria In addition, CRSP Investment Indexes weight companies based on Float- Adjusted Capitalization, which reflects the portion of company s Total Shares Outstanding available in the market CRSP Historical Index All Issues on US Exchanges (NYSE, NYSE MKT, ARCA, NASDAQ) Corporations & REITs Common Shares Domicile in US Investability Screens CRSP Investment Index Market Capitalization Float Shares Trading Volume Other Note: The graphic is used for illustration purposes, only to highlight some of the differences between CRSP Historical Index and CRSP Investment Indexes and does not represent the actual process of creating CRSP Investment Indexes. Please refer to Methodology Guide (http://www.crsp.com/files/equity-indexes-methodology-guide_0.pdf) for CRSP Investable Index methodology. 13
Why use CRSP U.S. Total Market Index CRSP US Total Market Index (NASDAQ Symbol CRSPTMT) covers almost 100 percent of US investable market which is why it is a good representation of the investor s entire opportunity set Companies are weighted by float-adjusted market capitalization which represents the proportion that is available to the investor Step 2 Includes US companies, not companies that are listed in the US 14
Comparing Top 10 Companies by Percent of Total Market as of November 30, 2017 Step 2 Using CRSP Research Data Using CRSP Investment Index Percent of U.S. Rank Company Percent of Total Market¹ Company Investable Total Market² 1 APPLE INC 2.49% APPLE INC COM 2.93% 2 ALPHABET INC 1.88% MICROSOFT CORP COM 2.38% 3 MICROSOFT CORP 1.84% ALPHABET INC 2.24% 4 AMAZON COM INC 1.60% AMAZON COM INC COM 1.76% 5 BERKSHIRE HATHAWAY INC DEL 1.35% FACEBOOK INC 1.54% 6 FACEBOOK INC 1.20% BERKSHIRE HATHAWAY 1.38% 7 JOHNSON & JOHNSON 1.06% JOHNSON & JOHNSON COM 1.37% 8 JPMORGAN CHASE & CO 1.03% JPMORGAN CHASE & CO COM 1.35% 9 EXXON MOBIL CORP 1.00% EXXON MOBIL CORP COM 1.29% 10 BANK OF AMERICA CORP 0.83% BANK OF AMERICA CORP COM 1.02% Source: CRSP US Stock Databases; CRSP Historical Indexes; CRSP Investment Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO 1000200); Percent of Total Market is computed using company s total shares outstanding ² Total Market is defined as CRSP US Total Market (NASDAQ Symbol CRSPTMT); Percent of Total Market is computed using company s float-adjusted market capitalization 15
Appendix 16
Market Capitalization as the Size of the Company To measure the size of the company we will use Total Market Capitalization CRSP computes Market Capitalization as TCAP = Shares Outstanding (in 1000s) * Closing Price Sources for more information: TCAP: http://www.crsp.com/products/documentation/datadefinitions-c#capitalization-end-of-period Shares Outstanding: http://www.crsp.com/products/documentation/data-definitionss#shares-outstanding Closing Price: http://www.crsp.com/products/documentation/datadefinitions-p#price-end-of-period 17
Adjusting for Inflation If we want to compare Market Cap from different times, we may want to adjust for inflation To adjust for inflation, we will use CPI-U time series monthly values from CRSP US Treasuries Database Note, this implies that we assume that a dollar at the beginning of the month and end of the month will be treated the same We used CPI-U value as published by US Bureau of Statistics Since we use data through November 2017, CPI-U for November 2017 was not available in the database. We used value 246.669 from https://data.bls.gov/timeseries/cuur0000sa0 To convert past dollars to the present adjusting for inflation, we did the following calculation: Step 1: FFFFFFFFFFFF = CCCCCC UU NNNNNN2017 CCCCCC UU PPPPPPPP Step 2: $ NNNNNN2017 = $ PPPPPPPP FFFFFFFFFFFF 18
Percent of Total Market Since the Capital Markets have been evolving, it maybe useful to look at the company as a percent of the Total Market For the historical analysis we define Total Market as market capitalization of CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index that includes all issues listed on the exchanges included in the name assuming that there is data to determine the price and shares outstanding Note, ADRs are excluded from the index Formula used to compute Percent of Total Market for a company at a given time t: %TTTTTTTTTT MMMMMMMMMMMM tt = CCCCCCCCCCCCyy ss MMMMMMMMMMMM CCCCCCCCCCCCCCCCCCCCCCCCCCCC tt TTTTTTTTTT MMMMMMMMMMMM CCCCCCCCCCCCCCCCCCCCCCCCCCCC tt For more information: http://www.crsp.com/products/researchproducts/crsp-historical-indexes 19
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