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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (106170)6/3/2001 8:49:44 AM
From: Box-By-The-Riviera™  Read Replies (2) of 436258
 
russell comments on grantham in barrons:

Grantham's forecasts are pretty much like my own, which, of course, is why I zeroed in on him. At any rate, Grantham believes that large US stocks are headed for a decade of flat to negative real returns that will mark the end of a 17-year bull cycle. This should bring the S&P 500 back to fair value and back to trend (regression to the mean, remember).

He believes that price/earnings, currently 27, will drop to 17.5 and company profit margins will sink from 7.8 to 6%. He also believes that the dividend rate will rise over the 10-year span.

Grantham defines bubbles as bull markets that run to extremes, at least two standard deviations over the long-term trend. He then states that not one of these bubbles, not a single one, has failed to give back every cent of its gains. Furthermore, he challenges a group of 2,400 investment professionals to pose a single exception to this rule. There were no takers. He stated, "Stock prices tend to return to average. What's driving stock prices down is that they went up."

Russell Comment: Bull markets beget bear markets, and bear markets beget bull markets. Day follows night and night follows day. We inhale and we exhale. I challenge anyone to simply inhale and never exhale.
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