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The ratio of the market value of US nonfinancial corporate equities to the replacement cost of the underlying net worth (assets minus liabilities, valued at what it would cost to rebuild them today). FRED publishes the underlying ratio (NCBCEPNW) as a percentage; this tile divides by 100 to express it as the canonical Q ratio. Quarterly, 1945-present.

Why it matters: Q answers a different question from price-to-book. Book value uses historical accounting cost; replacement cost is what you'd actually have to spend to recreate the assets today. In a long inflation, book understates true asset value and P/B looks artificially high. Q corrects for that. Theoretically, Q > 1 should attract new investment (firms can be created profitably) which competes the ratio back down toward 1; persistent Q >> 1 is an argument equities are pricing in monopoly rents or unsustainable margins.

How to read it: Long-run norm sits around 0.7–0.9. Q crossed 1 only briefly mid-1960s, then stayed sub-1 from the 70s until the late 1990s. The dot-com peak was just over 1.7. Today's ~2.4 is the highest reading on record. Whether you read this as "extreme overvaluation" or "structural shift to higher returns on capital" is a worldview question — the data is unambiguous; the interpretation is not.

Caveats: The denominator (replacement cost of net worth) depends on Fed Z.1 estimates that are revised. Q assumes asset replacement costs reflect economic reality, but for an economy increasingly dominated by intangibles (brand, network effects, data, software), replacement-cost accounting may understate true productive capital — partially explaining the upward drift since the 90s.