Sonders: There's a Bubble Alright ... in Bubble Talk

Charles Schwab Chief Investment Strategist Liz Ann Sonders says she sees a bubble in the stock market — but it’s not the bubble you’re thinking of.

Sonders tells Bloomberg Surveillance that she doesn’t think the broader stock market is near bubble territory. But, she says, “I think there’s a bubble in the discussion of bubbles.” Sonders says it may be appropriate to use the term bubble for some smaller areas of the market. But she says that overall, broader valuations just don’t indicate a bubble. The NASDAQ Composite, where a lot of those bubbly subsets reside, she says, trades for about 21 times earnings; back in 2000, when we were in a bubble, the multiple was 190.

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Sonders also says that, while fund flows have picked up, they still haven’t come close to making up for the outflows that occurred between 2008 and 2012. While we may be past the inflection point for fund flows, she says we are not at an extreme. 

Sonders also talks about the VIX, explaining why she thinks that it may not be the best gauge of market volatility anymore.