Friday, January 30, 2009

Serial bubbles

From FT Alphaville:

Dresdner has some interesting charts out today, depicting bubbles — and lots of them. Specifically in housing and equities in the UK, US and Japan.

Dresdner - UK house prices vs equities

Dresdner - US house prices vs equities

...You can see from the charts that a characteristic of post-2000 housing bubbles in the US and UK is their lack of correlation with equity markets. While house prices doubled and tripled, equity markets (with the exception of the BRICs) barely kept up with 1999/2000 highs. As Dresdner puts it (our emphasis):
In other words, over the past twenty years the world has experienced serial bubbles in equities and housing, in contrast to Japan’s 1980s/90s experience of synchronised bubbling and de-bubbling....MORE