The answer depends on your definition of “bubble”… and the market under the microscope. “House prices differ widely across OECD countries, both with respect to recent changes and to valuation levels,” the OECD advises in a report on residential real estate around the world.
Continue reading →

Michael Edesess questions the notion of a “rebalancing bonus,” wondering if it’s a ghost in money management’s machine. The concept, he recaps, was formalized in Bill Bernstein’s influential 1996 study—“The Rebalancing Bonus: Theory and Practice”, which found that “the actual return of a rebalanced portfolio usually exceeds the expected return calculated from the weighted sum of the component expected returns.” Edesess points out, apparently with Bernstein’s support, that the 1996 analysis is slightly misleading in the sense that the underlying assumptions aren’t as practical as they could or should be. Although Edesess’s number crunching is yet another reminder that you can’t count on rebalancing to boost return, that’s still not an argument for shunning rebalancing as a risk-management tool.
Continue reading →