As we explored in our accompanying article, “Going Global: What Does It Really Mean,” we are a huge part of the world when viewed by market cap, as the slide below shows. Thinking only in terms of landmass can distort investment decisions. Directly comparing the markets of nations produces some surprising results. Measures such as population, gross domestic product, or exports do not directly indicate the size or suitability of investments in a market.

This slide (one of our favorites) illustrates the balance of equity investment opportunities around the world. The size of each country has been adjusted to reflect its total relative capitalization.

Of course, the world is in motion—there is no fixed relationship between markets, and their proportion can change over time. Viewing the world this way brings the scope of diversification into new light and helps clarify allocation decisions.

A country’s equity market capitalization, or market cap, reflects the total value of shares issued by all publicly traded companies and is calculated as share price times the number of shares outstanding.