, Columnist
We're Worried About Bubbles. That's a Good Thing
Widespread anxiety is a sign that investors aren’t getting too exuberant.
A better sign than elation.
Photographer: Michael Nagle/Bloomberg
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The question doesn’t go away. Are stocks in a true bubble, which can only be corrected by bursting, or can their historically high valuations be justified by the historically low yields paid by bonds? And should the possibility of higher inflation, which all else equal would bring higher bond yields in its wake, be enough to deter investing in the stock market? Or should we be inured to the deflationary environment that has persisted for more than a decade?