From Barry Ritholtz.
What should the ratio be? I don't know. The two items are not directly comparable. GDP measures activity beyond that of stocks on the market. But if one assumes that GDP is proportional to the activity of the stocks, then what? There is another issue as well. If the market capitalization includes the values of ETF, then the values of actual companies are being double counted. For this purpose ETFs are like mutual funds. They are a way to invest in a company (really an index of the market or market segment) but they don't change the capitalization of the underlying companies. So they should not be counted. I wonder what you would get if you eliminated ETFs from the market caps.