What trillion-dollar numbers really tell investors
9 min readReaders of a certain age might remember Afrikaans singer Lucas Maree’s 1993 hit ‘Miljoen’ – a song about how life’s problems could be solved with a million rand. Back then, a million rand was serious money. Adjusted for inflation, Maree would need R6.6 million today to have the same purchasing power.
But even if we account for inflation – which lifts the cost of goods and services over time, but also incomes – we live in a world of very large numbers, even bigger than most people can comprehend.
A million has six digits and a billion has nine. However, a trillion has 13 digits. A trillion is a million times a million, and a thousand times a billion, yet it is a word we read about more and more.
Read: Elon Musk: World’s first trillionaire
The most striking, though short-lived, example was Elon Musk who briefly became a dollar trillionaire after the listing of SpaceX.
Richy Rich
The wealth of the world’s richest people is truly staggering.
In 1916, John D Rockefeller became the first confirmed dollar billionaire. It took a hundred years for Jeff Bezos to become the first person to be worth $100 billion.
That difference is not just inflation. In today’s money, Rockefeller would be worth around $30 billion; Bezos is genuinely richer. However, a mere 10 years after Bezos became a centibillionaire, 20 others have joined him in this elite club, and he is no longer number one.
Remarkably, Microsoft founder Bill Gates remains on the list despite donating around $60 billion to his charitable foundation, so does investor Warren Buffett, who has given away almost $70 billion.
All but four of the 20 are based in the US and have benefitted from a long-running bull market in US equities.
The US market has outperformed the rest of the world over the past 15 years as its companies have been more profitable.
However, investors are also prepared to pay more today for the same dollar of sales or profits than they were a decade ago.
This is reflected in several valuation metrics, including Professor Robert Shiller’s cyclically adjusted price-earnings (CAPE) ratio, shown in the chart below, which has increased steadily in recent years, reaching lofty levels.
US equity valuations and corporate profitability
Source: LSEG Datastream
Also shown in the chart above is the increase in companies’ profitability relative to US national income (GDP).
Companies are taking a larger share of the economic pie, implying a smaller share for workers.
Much of this can be attributed to the decline in effective corporate tax rates in the US, from around 30% in 1990 to less than 20% today. Companies’ interest costs have also fallen over the past few decades.
Another factor, however, is the rise of new ‘winner-takes-all’ business models. As the name suggests, some industries are dominated by one or two companies, where technology, increasing returns to scale or network effects make them seemingly impervious to competition.
Apple became the first company to reach a $1 trillion market value in 2018, amid much fanfare. Its value has only grown since then.
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Under the 15-year tenure of Tim Cook, who stepped down as CEO last week, Apple’s market capitalisation increased from $350 billion to $4.7 trillion, while its weighting in the S&P 500 rose from 3% to more than 6%.
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Again, this is not just inflation since $350 billion in 2011 is $560 billion in today’s money.
The growth has come from dominating its industry, including selling an estimated 3.5 billion iPhones under Cook’s leadership, while effectively managing very complex supply chains.
Today, 12 other listed companies are also worth more than $1 trillion, depending on daily share price movements. OpenAI and Anthropic could join them if, as expected, they list this year. All but three are American, and eight could arguably be characterised as ‘winner-takes-all’ businesses.
In the process, their founder-CEOs have become unimaginably rich.
While shareholders have benefitted greatly along the way, the increased concentration of wealth and power in the hands of a few raises deep political and social questions.
A notable exception is Buffett, who recently celebrated his 96th birthday. His vast fortune does not come from dominating a technological niche, but from savvy investing and the power of compounding over 85 years (he bought his first share at age 11).
Read: The Buffett way: how America’s fifth-richest man redefined wealth and responsibility
Compound growth remains a powerful force for turning small numbers into large ones, but it requires lots of time.
Returns to scale
Another area characterised by huge numbers is asset management.
BlackRock became the first firm to manage $1 trillion in client money in 2009 and remains the world’s largest asset manager.
It shrewdly bought the iShares business from Barclays after the global financial crisis, right about the time when index-tracking (passive investing) started growing rapidly.
Last Monday marked the 50th anniversary of Vanguard’s first index-tracking fund. It failed to generate much interest at launch, missing initial sales targets by miles. But index-tracking eventually took off.
Today, the fund is the world’s largest, with $1.7 trillion under management, and helped propel Vanguard into the position of the world’s second-largest asset manager, with $14 trillion in assets under management.
A book by financial journalist Robin Wigglesworth about Vanguard and the rise of indexation is appropriately titled ‘Trillions’. The title refers not only to the size of these companies, but also to the trillions in fees they have saved investors by offering low-cost products that track a benchmark rather than attempting to outperform it.
Drowning in debt
Part of the growth in both the value of listed companies and the asset managers is rising government debt levels.
Economics nerds will refer to the Kalecki equation, an accounting identity that expresses company profits as a function of spending in the economy, including the size of the government’s budget balance.
Here too, the numbers have been getting massive, contributing to the recent bond sell-off.
The deficit on the US federal government budget balance (difference between spending and tax revenues) first exceeded $1 trillion in 2009, in the wake of the global financial crisis.
It is normal for deficits to increase in a recession, as government spending rises and tax revenues fall.
The same happened when the pandemic hit, though on a bigger scale. The US deficit ballooned from $900 billion in 2019 to $3 trillion in 2020, before declining in 2021.
US Federal budget balance
Source: US Congressional Budget Office
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However, despite solid economic growth, it has been increasing, instead of shrinking. The 2025 tax cuts and an ageing population mean it will hit $3 trillion per year again in 2035, according to Congressional Budget Office projections.
By then, about two-thirds of the deficit will consist of interest payments on past borrowing.
The federal government’s net interest expense will top $1 trillion for the first time this year, exceeding the national defence budget. Ten years ago, it was only $240 billion.
This is not just America’s problem. Because the US is central to global financial markets, issues in the market for its government bonds can quickly spill over to the rest of the world.
The world’s factory
We cannot talk about big numbers without mentioning China, home to 1.4 billion people, although India is now the world’s most populous country.
The relevant number here is China’s trade surplus, which hit $1 trillion last year, the first time any country had earned so much more from exports than it spent on imports.
The trade surplus amounted to 4% of GDP last year, well above the long-term average of 1.5%.
One the one hand, it is a tremendous achievement. China is no longer just the biggest producer of low-cost items. It has successfully climbed up the value chain to the point where it is a major exporter of cars, high-end electronics, and everything to do with renewable energy.
On the other hand, the lack of imports reflects a deeply unbalanced domestic economy.
Consumers receive a smaller share of the total pie compared to other countries, and they save a larger share of their income compared to their counterparts elsewhere. Since the real estate bubble has burst, consumers have been particularly cautious.
China’s trade balance, rolling 12-month sum
Source: LSEG Datastream
This surplus has long been in US President Donald Trump’s crosshairs, but if it continues to grow, other countries could also respond with trade barriers to protect their domestic industries.
It is therefore a potential source of instability for the global economy, much like the US government deficit (the two are linked, but that is a story for another day).
Trillions at home
Does South Africa have any notable trillions, and what do these mega numbers tell local investors? Firstly, we are a small economy in the global context.
The only thing that comes close to the trillion-dollar mark is the JSE, with a total market cap of around $1.5 trillion. This alone tells local investors that they should broaden their horizons.
In rand terms, it is easier to get to a trillion.
Old Mutual, Sanlam and Ninety One each manage more than R1 trillion for clients across various products and business lines.
The Public Investment Corporation (PIC) is by far the biggest asset manager, looking after more than R3 trillion in government employees’ retirement savings.
The Big Four banks each have between R1 trillion and R3.4 trillion in assets (that is, loans to customers).
The South African Revenue Service (Sars) collected R2 trillion in tax revenue for the first time in the 2056/26 fiscal year.
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South Africa’s economic output (GDP) was R7.6 trillion in 2025, while government debt stood at R5.3 trillion, or around 70% of GDP. Fifteen years ago, it was just 30% of GDP.
Much of the increase in borrowing was unproductive, and the economy did not grow faster because of it.
Since much of the borrowing was done at high interest rates, the government now spends a fifth of its tax revenue on interest payments.
Unlike the US, however, South Africa has a plan to stabilise debt levels, and there has been some progress.
Invest with perspective
Finally, large numbers can be misleading and downright scary. This is why economists often don’t focus on raw numbers but rather express them as a share of GDP for context (as we’ve done throughout this article).
Similarly, analysts often assess companies using financial ratios such as debt-to-equity, interest coverage and the price-to-earnings ratio. Ratios allow for comparisons across time, as well as between different countries and sectors.
Growth rates are another way of putting large numbers into context. Something may be small today, but if it is growing rapidly, it will eventually become big.
Something that is big but growing slowly will eventually be overtaken (like China’s population). And as noted right up front, it makes sense to remove the impact of inflation when comparing numbers over time.
SA household debt as percentage of disposable income
Source: SA Reserve Bank
As an example of a big, scary number, a headline on a local news website recently read: “South African households have a R2.4 trillion problem”. It referred to household debt, and R2.4 trillion is indeed a large number.
However, it must be seen against R5 trillion in annual household disposable income
Household debt and income have grown at a similar pace over the past decade (excluding the handful of quarters around the Covid lockdowns) such that the ratio between them has been broadly stable. As the chart above shows, it is substantially lower than the 2008 peak.
In conclusion, these large numbers tell us a lot about the state of markets, the economy and geopolitics. In some cases, they are big not just because of the rising cost of goods and services over time, or compound growth, but because of deep changes in technology and business models.
Their size is also a function of what investors are prepared to pay and could reflect optimism that may eventually turn into pessimism.
The obvious question is what artificial intelligence could do.
Will it also become a winner-takes-all industry, in which case an Anthropic or OpenAI could become the first $10 trillion company?
Or will AI become a commodity, more akin to electricity?
Either way, it remains important to put both large and small numbers into the right perspective. Doing so helps us understand what they really mean and avoid making uninformed investment decisions.
Izak Odendaal is an investment strategist at Old Mutual Wealth.
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