We are concerned that the Federal Reserve is perpetuating an asset boom/bust cycle that began when Alan Greenspan was Fed chair. However, we don't think that the market is on the precipice of another Fed-induced asset-price collapse similar to the technology/Internet stock crash and the housing collapse. Here's why:
1) Asset prices, though inflated, are not really in bubble territory. Housing affordability has improved dramatically since the throes of the Great Recession due to the drop in housing prices and plummeting mortgage rates. The home-ownership rate is back to where it probably should be, and new household formation is finally picking up after years in which people chose to double up or live with their parents rather than buying or renting their own place.