Bubbles, And How to Avoid Them

NEW YORK CITY—Many would agree that we are once again in bubble territory in the pricing levels of financial assets.  In spite of a thorough absence of economic vibrancy and extreme levels of geopolitical instability that at the least drain resources that could otherwise be invested in economically productive endeavors, pricing of financial assets are at or near historical highs. The questions that are on many people’s minds today include:  How long can this go on for? What could cause the bubble to pop? How can I protect myself when it does?

For most of the past 4 years I have heard predictions of an imminent interest rate increase.   I recall sitting on a panel at a CBRE Investors conference around 2010 or 2011 while I was a senior member of their executive team, and in response to a question about rates I said that I believed that there was a great chance of rates declining than increasing in that next year.