This is a pretty good list from UBS on where the bubbles might be. I take issue with the first one, however as I definitely don’t think there’s a bubble in government bonds. Maybe Jeff Gundlach was right when he said there’s a bubble in central banking….That said, maybe we should just swap #1 out with Japan where the equity market looks frothy to say the least:
“We take a restrictive definition of bubble. The asset has:
(1) to be valued beyond the reasonable bounds of fundamentals and
(2) could correct rapidly.
This leaves us with only five candidates.
(1) Risk free rates: Treasuries, bunds, gilts and JGBs
(2) Credit, particularly in Europe
(3) Real estate in Asia
(4) EM stock markets: Specifically: Indonesia, the Philippines and Thailand.
We would also add Mexico on the grounds that it is expensive, illiquid and
of 28 stocks that UBS covers in the region only 5 have Buy ratings.
(5) Australian banks”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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