What is a Market Basket?
A market basket is a group of items that simulate the overall price movements in a market.
How Does a Market Basket Work?
At an economic level, a market basket is a permanent set of goods and services that are bought and sold as staples in a functional economy. Analysts and policymakers use average price changes in a market basket as the primary gauge of inflation. For example, the Consumer Price Index (CPI) is based on a market basket of consumer goods and services.
In the financial markets, a market basket includes a group of widely-held securities. An example would be the Dow Jones Industrial Average (DJIA).
Why Does a Market Basket Matter?
A market basket serves as a benchmark for measuring the price performance of other items in a market. The quality of a particular market basket is apparent in how closely the behavior of items in a market basket resembles the behavior of the overall financial market or the economy as a whole. Market baskets give investors and policy makers a simpler way of measuring and predicting market trends.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
We've managed to avoid the great Mayan prediction of the end of the world in 2012, along with countless doomsday prognostications before it. But while we shrug off the continued calls that some...
Read More →
Interest rates are at an all-time low. The housing market has finally begun to recover after hitting rock bottom late last year, according to a...
Read More →
Life insurance is more than simply an "umbrella" that protects your family financially in case something happens to you. Life insurance can also be an investment...
Read More →
“You can’t time the market.” -- The first and last rule of...
Read More →
Greece's economic woes have drawn the eyes of a jittery world lately, with many observers fearing that the nation's ...
Read More →
