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‘We will have a few weeks of extra money and a few weeks to put your last desperate chips in the game, and then an even more spectacular break … When you reach that level of obvious super enthusiasm, the bubble will always, without exception, break in the coming months, not a few years.
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These are the latest news from Jeremy Grantham, co-founder and chief investment strategist at Boston-based fund manager Grantham, Mayo, Van Otterloo & Co., offering strong warning to speculators who are taking the stock market to new heights. levels amid the greatest pandemic of the last century.
In an interview with Bloomberg TV’s “Front Row”, the famous investor, who has often been credited with several market forecasts over the past two decades, insists that a steady increase in stocks, promoted by free money from the Federal Reserve and the government fiscal stimulus, cannot continue without consequences.
“If you think you live in a world where production doesn’t matter and you can just create paper, sooner or later you will do the impossible, which is to bring inflation back,” warned Grantham.
This is far from the first word of caution Grantham has given in the past few weeks, but now he is aiming for the $ 1.9 trillion coronavirus relief package proposed by newly appointed US President Joe Biden, like another reason for a possible burst of the bubble.
Grantham is worth paying attention to because of his prescient calls over the years. He said the shares were overvalued in 2000 and again in 2007, anticipating market declines, reports The Wall Street Journal. Grantham also signaled that elements of the financial market had moved away from reality before the 2008-09 financial crisis.
However, the GMO lagged behind the S&P 500 SPX index,
in 2020, according to a report by Bloomberg News on Tuesday.
In June, one of GMO’s top investment executives, Ben Inker, told investors it was time to sell shares, in a letter to the client, cited by Bloomberg. Inker suggested to Bloomberg that investing is not an easy game.
Meanwhile, American stocks challenged Grantham’s pessimistic outlook and gravity. The Nasdaq Composite Index COMP,
the Dow Jones Industrial Average DJIA,
and the S&P 500 index are all trading near historic highs.