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“We’ll have a few weeks of extra money and a few weeks to put your last desperate chips into the game, and then an even more spectacular bust … When you’ve reached that level of obvious super-enthusiasm, the bubble has always, without exception, broken into the next few months, not a few years.
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This is the latest from Jeremy Grantham, co-founder and investment strategist of Boston-based money manager Grantham, Mayo, Van Otterloo & Co., who offers a stern warning to speculators leading the stock market to new heights. in the midst of the biggest pandemic of the last century.
In an interview with Bloomberg TV’s “Front Row” program, the famous investor, who has often been blamed for several market calls over the past two decades, insists on a steady rise in shares, fueled by the company’s free money. Federal Reserve and government tax rates. stimulus, cannot continue without consequences.
“If you think you live in a world where production doesn’t matter and you can only create paper, sooner or later you will do the impossible and that will mean recovering inflation,” Grantham warned.
This is far from the first word of caution that Grantham has sounded in recent weeks, but now points to the $ 1.9 trillion coronavirus relief package proposed by newly inaugurated U.S. President Joe Biden, as on account of more than one eventual burst of the bubble.
Grantham is worth paying attention to because of its recent calls over the years. He said the shares were overvalued in 2000 and again in 2007, anticipating market recessions, the Wall Street Journal reports. Grantham also noted that financial market elements had become untied from the reality that led to the 2008-09 financial crisis.
However, GMOs did poorly in the SP&S S&P 500 index.
in 2020, according to a Bloomberg News report Tuesday.
In June, one of GMO’s top investment agents, Ben Inker, told investors it was time to sell shares, in a client letter, quoted by Bloomberg. Inker suggested to Bloomberg that investing is not an easy game.
Meanwhile, US stocks have challenged Grantham’s bearish forecasts and severity. The Nasdaq Composite Index COMP,
the Dow Jones Industrial Average DJIA,
and the S&P 500 index are trading near historic highs.