Missing the Market, Currencies & Big Macs
January 23, 2018
Many individual investors remain on the sidelines. The Wall Street Journal reports that many investors have missed the recent surge in stock prices. Since 2012 retail investors have been net sellers of stock funds. Before the financial crisis in 2008, sixty-two percent of households owned stock funds. Today that number is down to fifty-four percent.
Currencies and Big Macs The Economist magazine has what it calls a light-hearted guide to currencies, the Big Mac Index. The idea is that the price, in local currency, of a Big Mac reflects whether a currency is over-valued or under-valued relative to the U.S. dollar. The average price in the U.S. is $5.28 while it costs $6.76 in Switzerland and $2.29 in Russia. Thus, the Swiss franc is over-valued, and the Russian ruble is under-valued. Bon appétit.