Originally published at Financial Times | December 10, 2013
One of the most common questions investors ask today is: “Are we in a bubble in financial assets?” It is easy to understand where such a query comes from, but the answer is a pretty clear “no”.
It is close to five years since the US Federal Reserve introduced quantitative easing. Since then, global equities have returned more than 16 per cent a year on average, and US high yield credit 18 per cent. Such gains have vastly outstripped growth in gross domestic product and corporate earnings.