Asset Allocation Strategy
Bubble Trouble?
Mon 8th February, 2021

The past year has seen some spectacular performances in a concentrated number of equity sectors and some alternative asset classes.

US tech and Bitcoin are two noteworthy examples, and more recently we have seen a spectacular rise in heavily shorted US stocks and also the price of silver (the second surge in 12 months).

Bubbly price moves are raising concerns that many markets are becoming detached from reality and vulnerable to a major reality check. Indeed some commentators have gone as far as to label the entire US equity market as being in extreme bubble territory.

Just how big and how widespread are valuation excesses and how vulnerable are risk assets to a significant unwind? Moreover, why are we seeing a run of parabolic moves in certain asset classes?

We look at the ingredients in the mix for potential asset bubbles, exploring the general strength of equities and some of the explosive moves in other areas of the financial markets, including:

  • The US short squeeze
  • The Bitcoin narrative
  • The recent move up in the silver price.

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    Written by

    David Cassidy , Head of Investment Strategy

    David is one of Australia’s leading investment strategists.

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