While many parts of the market are showing signs of “irrational exuberance” that should alarm some investors, UBS’s Mark Haefele says there are still some risk assets outside of bubble territory, Business Insider reports.
“All of the bubble preconditions are in place,” he explained in a note, citing record low financing costs, new participants entering into the market, and a combination of historically low interest rates and high savings rates from government stimulus that’s left investors who are searching for returns with no alternative but equities.
However, Haefele said that while parts of the market seem speculative, investors shouldn’t worry that the whole market is in a bubble.
“The cryptocurrency markets are exhibiting signs of excessive speculation and the IPO/SPAC markets are the hottest in two decades. But these markets do not yet pose a broader systemic risk,” the chief investment officer of global wealth management said. Read more.
