This is exchanges at Goldman Sachs where we discuss developments currently shaping markets, industries in the global economy.

I'm Jake Stewart, Global Head of Corporate Communications here at the firm.

Today we're going to talk about whether global markets are experiencing a bubble, a big topic today,

and what signpost investors should be watching. We're joined by

Peter Oppenheimer, Chief Global Equity Strategist and head of macro research in

Europe and Peter's going to talk a little bit about a new research piece he has out on that very topic.

Peter, welcome back to the program.

Thank you so much, Jay.

So Peter, a lot of chat about bubbles.

You've just completed an analysis looking at stock market bubbles in the history of it.

What exactly constitutes a bubble?

Well I think the first question is what do we define as a bubble because not every period

where prices of assets rise rapidly are bubbles.

I think a reasonable working definition might be a rapid acceleration in prices and valuations

that makes an unrealistic claim on future growth and returns.

And typically these bubbles therefore are developing not reflecting actual fundamentals but purely on hope and

possibility. So I think that's a reasonable definition and what we find looking

back at bubbles and this study looks at some of the very well-known ones going

back over 300 years is that there are some very typical conditions that are prevalent

around nearly all of them. First of all, of course, excessive price appreciation

and very extreme valuations, that's at the core of it. But also you tend to get a kind of

new era type of narrative that builds up and that leads investors to justify new valuation

...