Market capitalization just extrapolates a price from the current share price and number of outstanding shares. While this reflects a theoretical value for the companies/stock market in question, it does not at all reflect how much real capital was actually invested. To compute that, we would need to sum the cost basis for every share. This is what I am calling the "true market capitalization". It reflects the total number of dollars actually invested, rather than an unrealistic number of dollars that would be recovered if the stock were liquidated at the current price.

Obviously, this is impossible for a single citizen to compute because it requires access to non-public information. While one could easily capture the entire ticker for a stock symbol and see the price of every trade made on that stock, we don't know which shares were sold to complete that trade. However, the IRS should know (in the US) because shareholders are required to report stock sales on Form 8949. This should theoretically allow them to compute the exact capital gain/loss for all shares (assuming they are all reported as required, of course).

AFAIK, the IRS makes no attempt to compute this value, let alone publish it, for individual corporations or the market as a whole. However, it seems like it could be an interesting macroeconomic indicator, because we could see when the naive capitalization exceeds the true capitalization, which would imply optimism or shareholders hanging onto the stock for a longer time. Combined with volatility data, we could probably make some inferences about which is more likely to be true.

Are there any attempts by researchers to estimate this or similar values? Or is there some government which computes it precisely?



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