US stock market in ‘epic bubble’ just like 1929 crash, warns famed investor Jeremy Grantham; tells what to do
The long bull market run on Wall Street since 2009 has now turned into a full-fledged epic bubble, said billionaire investor Jeremy Grantham yesterday. This came from Jeremy Grantham after the benchmark S&P500 rallied over 16 per cent since lows of March 2020, recovering nearly 30 per cent. GMO co-founder Jeremy Grantham said that even as this bubble may survive for a little longer, it will soon burst, advising investors to find opportunities in deep value stocks.
In a note titled “Waiting for the Last Dance,” Grantham warned that this bubble will burst in due time and even the US Federal Reserve will not be able to stop its damaging effects on the economy and portfolios. The S&P 500 index has zoomed over 455 per cent since the closing level of 676.53 points on March 9, 2009 — the financial crisis day. The index has delivered 14.39 per cent 10-year annualised returns. The benchmark index ended the year 2020 at 3,756,07 levels.
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Jeremy said that today’s market features extreme disparities in value by asset class, sector, and company. Those at the very cheap end include traditional value stocks all over the world, relative to growth stocks. He added that value stocks have had their worst-ever relative decade ending December 2019, followed by the worst-ever year in 2020, with spreads between Growth and Value performance averaging between 20 and 30 percentage points for the single year. “Not surprisingly, we believe it is in the overlap of these two ideas, Value and Emerging, that your relative bets should go, along with the greatest avoidance of the US Growth stocks that your career and business risk will allow,” he said.
financialexpress.com |
