Ask a well-educated person which country boasts the largest equity market and you’ll usually get the right answer: the United States. Ask which country has the second largest market and you’re likely to get a range of answers: Japan? Britain? Germany?

The answer is China. In terms of annual trading volume, China's equity market has been #2 since 2009. Measured by total market capitalization, it has been #2 for seven of the past nine years....

Why should this matter now? First, because it highlights the extraordinary spread of market-based finance in a country led for more than 65 years by its communist party.... Second, because the growth in Chinese equity markets comes with sizable risks. Recent experience drives home this point....

Steve Cecchetti and Kim SchoenholtzJuly 6, 2015China, Stocks, Stock market, Shanghai, Shenzhen, Stock indexes, Margin lending, Risk, Volatility

Should I buy or should I sell?

The U.S. stock market dropped last week, but the S&P 500 index is still 13% above its year-ago level and a whopping 181% above its March 2009 trough. If you are an investor, your goal is to buy low and sell high. Looking at the stock market, what would we do today? Are prices too high? Are they too low? Or, are they just right?

Steve Cecchetti and Kim SchoenholtzAugust 7, 2014Stocks, Fundamentals, Arbitrage, Market efficiency, Asset price bubbles, Risk-return tradeoff, Real interest rate, Earnings

Commentary

Money, Banking, and Financial Markets