Our research leads us to the following insights:

• Bubbles and crashes are extreme examples of investors over- or under- reacting to market information
• The fair value of equity and fixed income assets can be determined and the market prices of these assets generally tend to return to their fair value over long periods of time
• Risk management, in the end, comes down to actively allocating more capital to underpriced assets and less or none to overpriced assets and managing inflation and currency exposures
• In the short term, investor sentiment tends to drive asset prices in a particular direction