Value Investing Legend Sees Bubble “Like No Other” Bursting In “Weeks Or Months”
Tyler Durden
Fri, 10/23/2020 – 17:20
Back in June, the generally cheerful investing icon Jeremy Grantham unleashed fire and brimstone, taking his $7.5BN portfolio to a net short position for the first time since the financial crisis, and summarizing his dire assessment of the current unprecedented situation simply by saying “this will end badly.”
Doubling down on his apocalyptic message, the one-time value investing guru told CNBC at the time that the US stock market is in a unprecedented bubble and investing in it is “simply playing with fire.”
“I have been completely amazed,” the veteran bearish investor said in an interview Wednesday on CNBC.
“It is a rally without precedent – the fastest in this time ever and the only one in the history books that takes place against a background of undeniable economic problems.”
His advice to an entire generation of young daytraders jumping into the market now was to sell U.S. stocks, buy emerging market equities and “throw the key away” for a few years, he said, adding “this is becoming the fourth real McCoy bubble of my career.”
Turns out, Grantham was only getting started. In a lengthy interview this week, cranked up the fear factor to ’11’ as he warned that “we are in a bubble,” the value-investing legend said, “but it is unlike any other,” adding that he is looking for signs of “crazy” to signal the peak.
Grantham note that “the stories [of crazy] are everywhere and are what you need for a bubble to break,” focusing his attentiojn most specifically on the recent resurgence in SPACs: “give me your money and trust me that I will do something useful with it.”
“That is a real testimonial to the speculative nature of the market,”
“Everything is overpriced,” he said, and while he could obviously offer no certainty as to the timing of the bubble bursting, Grantham warned:
“My bet is that reality will catch up with the high P/Es… it is a matter of weeks or months, not years…”
Watch the full interview below:
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