Oliver's Insights - Bubble trouble, the next global asset bubble
7 Oct 2010 - This note looks at the next bubble in global asset markets.
The key points are as folllows:
- Asset bubbles are a fact of life and flow from human nature which has a strong tendency to jump on to popular fads.
- There is a long history of new bubbles forming from the ashes of the last burst bubble and this time around is unlikely to be any different.
- Easy global money which is getting easier as growth remains subpar in developed countries and various emerging countries resist upwards pressure on their currencies is setting the scene for the next asset bubble.
- Potential candidates are gold and commodity prices, emerging markets and resources shares. But the absence of obvious overvaluation suggests we are still in the foothills of the next bubble which likely has years to run, with plenty of opportunities for investors in these assets in the interim.
