Big Mac Attack

Here at Atlas Indicators we take pride in the lengths we will go to avail ourselves of the best research we can possibly afford.  We will sacrifice our bodies for the cause.  We will even sacrifice yours on occasion.  Thus it happens that I recently found myself dining at a local McDonald’s with Jack and Carmen, two clients who share my enthusiasm for going that extra mile in search of truth.  As background, allow me to remind you that the Big Mac is not just iconic; it is also used by The Economist, a publication to which I subscribe, to measure the relative value of currencies.  The theory states that, given McDonald’s strict standards regarding their menu, a Big Mac is prepared in exactly the same way in countries around the world.  Determining how much this particular delight to gourmands everywhere costs in both the local currency and in U.S. dollars at the prevailing conversion rate, provides us with a measure they call Purchasing Power Parity.  Turns out we locals get a pretty good deal relative to most anywhere else.  But wait, there’s more!  UBS, a Swiss bank, decided to see just how long it took citizens of 73 cities around the world to earn enough to buy a Big Mac.  Here we do it in about 12 minutes.  In Nairobi it takes roughly two hours.  We earn ten burgers to their one.  What Jack, Carmen, and I discovered is that we only needed five minutes to consume that which we strove twelve to pay for.  How that startling piece of research will prove helpful in portfolio construction remains to be seen.  Right now I’m thinking it might need further research.  Want fries with that?