Amid the recent decline in U.S. stocks, legendary investor Jeremy Grantham, founder of investment agency GMO, continued his “super bubble” argument, warning that the S&P 500 would plummet 43% after the bubble burst. fell to around 2500 points.
The veteran investor said in an interview over the weekend that what needs to be done right now is to stock up on cash and that there could be some good buying opportunities in the next few years.
The market historian has previously said that he holds cash for easy deployment and a small amount of gold and silver himself.
“Secondly, I would try to avoid U.S. stocks, and if you had to own some, I would go for quality stocks,” Graham said. “They always do better with drastic moves.”
Graham has warned investors many times before that this is the fourth “super bubble”, just like the Wall Street crash in 1929, the Internet bubble in 2000 and the global financial crisis in 2008. He said that the S&P 500 is about to collapse, Means a credit crisis is brewing.
He believes blue-chip stocks are the right choice, avoiding debt and, where possible, the U.S. — the most overvalued market.
He said real estate around the world was overvalued. “But it’s weird that stocks outside the U.S. aren’t that bad. They’re in a bull market.”
According to Graham, Britain and Japan are countries that appear to be cheap, and traders can also find bargains in emerging markets.
In an article published last month, Graham said he deplored the super-bubble that the Federal Reserve and other financial institutions, instead of acknowledging the suffering of the people after the bubble burst, allowed and facilitated them.