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Why Grantham Says the Next Crash Will Rival 1929, 2000
Using his words ... "if the Fed continues to be favorable" and the U.S. comes out of the Covid and we're past vaccinations this summer. . . Do you really believe the US stock market is going to implode? With all of the pent up demand? Travel, consumer discretionary / spending?
Appreciate the share of the interview. Interesting to see all sides. I'm just not buying the "impending" crash. I didn't buy it in April 2020 or on 1/27/21 and I'm not buying it today. But I don't have a magic 8 ball either.
• "And in the End . . . How does this spasm of speculation conclude? I have a high degree of confidence in my answer: The same way it always does.
There will be tears, massive losses by some and big gains by others. There will be lives ruined and lessons learned among the claims of a rigged market, insider trading, and fraud. Maybe even people go to jail (maybe not). As Wall Street runs red with proverbial blood, a few clever bastards will notice the “generational buying opportunity” — the fourth such rare entry point over the past 20 years."
And here too:
“ Of the 10 million who have still not found a job after being laid off this past year, we estimate that only three million will come back to the workforce. That leaves seven million unemployed long term on top of the four million who have already exited the labour market.
Life is not going back to normal even if the market doesn’t yet see it and the consensus builds that we are heading to the Roaring Twenties.”
And on Twitter:
Grantham is a bear for years. It's always "news" calling for a bear market. The 24/7 media machine wants you to read these articles and how they get paid.
But hey, Gundlach predicted the 10 years treasury would be at 6% in 2021. Arnott told us that his massive research works and PAUIX had a terrible performance. Bogle told us regression to the mean must happen, and it didn't.
2010: GMO's Grantham Warns of a Stock Bubble(link) WRONG
2012: “People think the American market is very cheap. We don’t. Grantham is bullish about international stocks. (link) WRONG
2014: Grantham: Big Stock Bubble ‘Will End Badly’ in 2016 (link) WRONG
I never listen to any predictions. As a trader I only pay attention to prices, charts and trends lately and NOW. They tell me in real time what the market is doing. In the last 10 years I was invested at 99+% of my money at 97% of the time. The key for me is to invest all my money all the time and no cash, BUT, when risk is high to be in a high % of cash for days to several weeks.
What about on the downside?
I love Grantham's letters and long discussions of what the rational thing to do is. But the market is not rational. If it were all we would need is one index fund.
I thought Henry Blodgett's 1998 call to buy Amazon at $240 was nuts.
I always thought I should run a mutual fund that does the exact opposite of what I do in the Market.
Wrong predictions from individuals or firms are often forgotten in the future.
Here's a little context.
“Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.”
@sma3 - Oh how I know the feeling. Thanks for the laugh.