Bubbles are always a contentious issue. The one defining characteristic they all share is an excess of optimism. And there are certainly examples of this in the current landscape – Bitcoin, Tesla, GameStop, and the rise of special purpose acquisition companies (SPACs), all fit the exuberance bill.

But these isolated examples shouldn’t be used to paint the entire investment universe as expensive – investing is a far more subtle science than that.

What is a little bit more binary, and perhaps even more important, is what role the US Fed chooses to play going forward. Will it embrace its longstanding mandate to control inflation? Or will it adopt an approach more concerned with economic growth? The former pops bubbles, the latter inflates them.

“The Fed’s rate hiking cycle was abandoned in 2013 and 2018 due to the taper tantrums. It needs to get out of the business of keeping the market happy and stop trying to prevent declines in the index.”

Howard Marks, Co-Founder & Co-Chairman of Oaktree Capital Management

Read more here Are stocks in a bubble and what should investors do?