Jeremy Grantham, the legendary investor and co-founder of asset management agency GMO, warned that despite the volatility in U.S. stocks this year, the “super bubble” he warned about has yet to burst.
Graham, 83, has warned for years of a market bubble. He said on Wednesday (31st) that the sharp rise in U.S. stocks from mid-June to mid-August was in line with the pattern of a bear market rebound, and warned that more troubles will follow, including overvaluation of stocks, bonds and real estate. High, commodity shock, hawkish Fed.
Guerra and earlier this year predicted that U.S. stocks would experience a historic crash of nearly 50%, whileS&P 500 IndexDuring the June rout, it tumbled about 25% from its January high, but rebounded in the following two months. Now U.S. stocks are falling again, and they have fallen for four straight days as of Wednesday, and well-known strategists such as Morgan Stanley Mike Wilson have warned that the stock market has not yet bottomed.
“It’s a classic bear market rally where people say, ‘Oh, this is the new bull market,’ but that’s nonsense,” Graham said.
According to his analysis, the burst of the super bubble will be divided into several stages: first, there will be a heavy crash similar to the first half of this year, then a slight rebound, and finally the fundamentals will collapse and the market will fall to the bottom.
Graham is famous for predicting Japan’s asset bubble in the late 1980s, the dot-com bubble in 2000, and the financial tsunami of 2008, but he has his predictions wrong at times.
Graham this time pointed the source of the bursting bubble to the Russian-Ukrainian war, fiscal austerity, and China’s ongoing epidemic prevention and control. He predicted that the stock market slump in the first half of the year was due to rising inflation, and the next wave of losses would come from slumping corporate profits.
The legendary investor said people are going into tough times, both financially and financially, “but I don’t know yet, if things will get out of control like in the 1930s, or well-controlled like in the 2000s, or somewhere in between. between?”