Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index?
Cents and Sensibility: the Inflation Guy Podcast
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The Weight of a Car in an Index
If I buy a car, its price is many times higher than the price of a gallon of gasoline. If they create an index based on price, no matter how you do it, you're going to tend to overweight the things that are going up in price. It's the same reason that a capitalization weighted equity index is going to have too much weight in stocks that are in bubbles and too little weight in stocks which are in unnatural negative bubbles.
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