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Fears that the meteoric rise in stocks and commodities prices is creating another asset bubble have investors debating whether to pull back now or ride the rally until the bubble bursts next year when the Fed starts raising interest rates.
Warnings about another asset bubble—which have become more pronounced recently from economist Nouriel Roubini as well as others—stem from concern that the market's continued rally is not the result of an improving economy but the Fed's low interest rates, which make dollar-denominated assets cheaper.
Both stocks and commodities have surfed the wave for much of the year, sending stocks up by 60 percent from the March lows while some commodities, particularly metals and energy, have posted gains in excess of 100 percent.
"The thing that's super-difficult to gauge is how much longer will these assets all keep rising in tandem. It's virtually impossible to gauge but it could end up surprising people and go longer than people think," says Chip Hanlon, president of Delta Global Advisors in Huntington Beach, Calif.
"If that's the case, is it crazy to try and play this rally? No. But I just think it would be crazy to play it without having a very clear exit plan in mind. Hedge yourself, and be ready to act."
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