“My confidence is rising quite quickly that this is not, in fact, become the fourth, real McCoy, bubble of my career. Larger bubbles can go on for a long time and cause a lot of pain, but at least I think we know now that we are in a. And the boldness that characterize a bubble at the time of the massive economic and financial uncertainty is important.’
This is Jeremy Grantham, co-founder and chief investment strategist at Boston money manager Grantham, Mayo, Van Otterloo & Co., offering a stark warning to the speculators driving the stock market to new heights in the midst of the largest pandemic of the past century.
“This is really true, it is a crazy thing,” said Grantham in a Wednesday afternoon interview on CNBC that seemed to knock some of the stuffing out of a market that had been drifting along nonchalantly on Wednesday.
reflects a market that may be the most bubblicious he has seen in his legendary career.
Read: The rise of mom-and-pop investors in the stock market ” the end is in tears, warns the billionaire Cooperman “This is an unprecedented gathering,” he told CNBC, noting that the run-up comes amid a period where the U.S. economy of the health is at a low point, with millions of people out of work and bankruptcies expected to continue to grow due to a slowdown in economic activity and closures that came as a result of these prohibitions have been implemented to curb the spread of the deadly COVID-19 pathogen.
The markets, however, have been busting higher, since it reaches a hollow, on the 23rd of March. In fact, the Dow Jones Industrial average
has zoomed to 40.5% higher since the end of March, the S&P 500
has climbed to 39% and the technology-heavy Nasdaq Composite Index
has increased by more than 44% over the period, the establishment of an all-time high last week for the first time since February. 19
Grantham is worth paying attention to because of his prescient calls over the years. He said that the stocks were overvalued in 2000 and again in 2007, the anticipation of these market downturns, the Wall Street Journal. Grantham has also been reported that the elements of the financial market had become unmoored from reality leading up to the financial crisis of 2008-09.
Check out:“The dollar will fall very, very sharply,” warns the eminent Yale economist
Asked what the level of exposure investors should have to stocks in the U.S., Grantham offered a steadfast view, which could leave some bulls on the ass.
“I think a good number is equal to zero and less than zero, may not be a bad idea if you can bear it.”
The placement of experts noted that the monetary stimulus of the Federal Reserve, whose balance sheet has jumped from $ 4 trillion in March to $7.21 trillion in the last week, and the efforts made by the government to help average Americans has been a factor that has helped increase the value of the shares, in the midst of this crisis.
“Clearly, the Fed spread the money around has created a supportive environment.”
Even before the CNBC interview that aired on Wednesday, Grantham, and of those that his company has been bearish. “The uncertainty has seldom been more…oddly enough, neither has the stock market,” warned Ben inker, GMO’s head of asset allocation, adding that the investment company has reduced stock exposure in its flagship product, the index of Reference-Free Allocation Strategy of 55% in March to 25% by the end of the month of April.
Check out the Grantham interview on CNBC below: