Wednesday, September 21, 2011
‘A bubble is a bull market in which you don’t have a position’.
There's nothing so frustrating as seeing someone of undoubtedly inferior intelligence earn fortunes while you're sat on the sidelines. So you declare his market a bubble. The UK and US government bond markets are both, very much, 'bull markets in which I don't have a position'. But are developed government bond markets in a bubble? Let's use King, Smith, Williams and Van Boening's 1993 definition: a bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values".