"Q"

From Returns for Domestic Nonfinancial Business (PDF) by Sarah Osborne and Bonnie A. Retus:

Tobin’s Q, or simply “Q,” is the ratio of financial-market valuation of corporate assets to the current-cost value of the assets. A Q ratio above 1 indicates that financial markets value corporate assets above their replacement cost; as a Q ratio rises above 1, companies may be more inclined to make direct investments in plant and equipment. A value of Q below 1 indicates that the financial markets value corporate assets below the replacement cost; as Q falls below 1, companies may be more inclined to buy other companies for their capacity rather than make direct investments.

I don't know these things. That's why I capture them. If the quote is correct, then:

Q is above 1 when financial markets highly value corporate assets. And Q above 1 is good for investment. So a "high" stock market should be good for investment.

Q is below 1 when financial markets put low value on corporate assets. And Q below 1 (a "low" stock market) is good for mergers and acquisitions. Well that makes sense I guess.

Who knew? (Everybody but me, probably.)