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Stock-market legend who called 3 financial bubbles says this one is the ‘Real McCoy,’..‘crazy stuff'

davfordavfor
in Other Investing
Jeremy Grantham made some big calls correctly in past decades. His track record in the current era of massive Fed interventions has not been so good. He is now making another one of those big calls. Here is an article and a link to a video presentation. I don't see that he laid out a clear case regarding what will cause the markets to turn away from their Pavlovian "buy response" to ever increasing amounts of monetary -- and perhaps now also fiscal -- stimulus. But, it is probably still worth listening to what he has to say.
‘My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.’
https://marketwatch.com/story/stock-market-legend-who-called-3-stock-market-bubbles-says-this-one-is-the-real-mccoy-this-is-crazy-stuff-2020-06-17


Comments

  • FD1000
    Sorry, Jeremy Grantham was wrong so many times since 2010 that it's not even funny but sad.
    He predicted at the end of 2010 that US stocks will lag EM but he also was way, way off about several categories performance.
    image
    Example: he said that US will make 2.5% inflation + 0.4% = 2.9% yearly average in the next 7 years. The SP500 made 14.45% in the next 7 years (link)

    All these "experts" are wrong because of Fed intervention.

    Bottom line: add another false prediction.
  • WABACWABAC
    Every time I read about Grantham I try to remember what "Adam Smith" wrote about him years ago, when Grantham was a young man.

    So, I went looking. While I have concluded I'm just going to have to re-read "Adam Smith," I did find a wealth of quotes that might come in handy for investors of a certain frame of mind:

    Here.

    Here.

    And here.

    Besides re-reading "Adam Smith," I think I need to pick up a copy of Where are the Customer's Yachts?, by Fred Schwed Jr. "Smith" was certainly all about preserving principal.
  • hank
    edited June 2020
    When it rains it pours ... Reading MFO and following Bloomberg ... it now appears that we are in the midst of an inflated dollar ... inflated bond market ... and inflated equity market.

    Where to hide?

    - It’s hard to call cash “inflated” at today’s rates.

    - Oil was twice as expensive 10 years ago as today.

    - Japan’s Nikki 225 stock index isn’t yet back to 1980s levels.

    - Silver was more expensive in 1980 than now.

    - Many Latin American countries are mired in debt, unstable governance, corruption and rampant Covid 19. These are scary scenarios. On the other hand these are the kinds of conditions that can prick bubbles and reward long term patient investors.


    Longer term: U.S. equities may well have attained “bubble” status. But those who’ve invested in them over the past 30 years (and longer) have been laughing all the way to the bank.

    Perspective: I graduated from HS in ‘65 with little knowledge of investing (aside from saving cash acquired caddying). A friend in college (around ‘67-‘68) introduced me to her dad who was selling mutual funds as a second job. That was the first I ever heard of them. He talked them up optimistically. We’d just been through a serious market correction and most average people feared stock investing. Since that time, markets have experienced multiple bull and bear markets. The term “bubble” gets tossed around loosely. If there were bubbles along the way, after they burst the U.S. market went on to even higher levels.

    Link: Linked article discusses the highs and lows in the U.S. market since my own initial 1967-68 reference period. https://www.fool.com/investing/general/2013/02/25/bear-markets-in-modern-times.aspx Others here who date back to the ‘30s, ‘40s and ‘50s may want to share their even earlier recollections.
  • Muggles208
    Just “Latin” American?
  • hank
    edited June 2020
    Muggles208 said:

    Just “Latin” American?

    :) - Well .... It’s a matter of degree I guess. We’re working on it. Apparently Argentina’s printing presses don’t function as effectively as ours. And per another thread, Tweety doesn’t compare to Bolsonaro. (Note: I was a dissenting vote.)
  • davfordavfor
    edited June 2020
    Here is the current "trending toward the mean" thinking from GMO (similar to Grantham's thinking) in the form of their 7 year real return projections for May 2020:

    image

    https://gmo.com/americas/research-library/gmo-7-year-asset-class-forecast-may-2020/

  • rforno

    One of these years he'll be right again....
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