What's in a Bubble? - David Rosenberg, Gluskin Sheff

What's in a Bubble? - David Rosenberg, Gluskin Sheff

Of course, before you can address this file, you have to have a definition as to what is a bubble. Everyone has their own definition. Or as Alan Greenspan liked to say back in the day, you can only tell if something was in a bubble after the fact (nonsense). Well, we gave it a strict definition based on price only, and whether the asset class in question was at least one standard deviation away from its historical norm. Investor complacency is definitely in a bubble in terms of extreme low levels of volatility. Then again, this is a product of the Fed (and other central banks) applying massive doses of sedative to the marketplace. So the VIX which measures the price of downside protection in the stock market has a normalized value of -1.1 (values of standard deviation, above or below 1 is bubble like); and in the bond market, the comparable score for the MOVE index is -1.5. 

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