Most People Have No Idea How Much Stocks are Likely to Crash
S&P 500 chart courtesy of StockCharts.Com, annotations by Mish with thanks to Jeremy Grantham.
Fourth Super Bubble
For almost a half-century, value-investing icon Jeremy Grantham has been calling market bubbles. Now, he says U.S. stocks are in a “super bubble,” only the fourth in history, and poised to collapse.
Please do yourself a big favor and play the above interview in entirety.
It’s not a fluff interview. Bloomberg’s Erik Schatzker grills Jeremy Grantham right from the get go about Grantham’s view a year ago.
Q&A Snips
Schatzker: At the risk of putting words in your mouth, you are as certain [now] as you were then, if not more?
Grantham: I would say clearly more. I did freely admit, not in our conversation, but elsewhere, that I wasn’t quite as certain about this bubble a year ago as I had been about the tech bubble of 2000 or as I had been in Japan or as I had been in the housing bubble of 2007. I used to think in terms of near certainties. This time I felt highly likely bit perhaps not nearly certain. Today I feel it is just about nearly certain.
Grantham discusses “crazy behavior” , noting that even in 1929 you had some magnificent rallies.
Schatzker: If you are right and stocks are in a multi-sigma deviation from the statistical trend, tell me what happens. The S&P 500 peaked at almost 4800 points. What is the bottom?
Grantham: The trend line, being slightly generous, is 2500. And most of the great bubbles, the super bubbles go below trend and stay there for quite a while…
…click on the above link to read the rest of the article…
