“Super Bubbles” enter the final act - Jeremy Grantham

[Tara]

Interesting read from Jeremy Grantham about the ending of the three “Super Bubbles” in Equities, Bonds, and Housing.

He seems to be forecasting falls of at least 50% in the S&P, and the same in house prices.

https://www.gmo.com/americas/research-l ... final-act/

https://www.zerohedge.com/markets/prepa ... -yet-burst

[baldchap]

Interesting, but i find him rather Chicken Licken in his predictions. Of course he only has to be correct once.
My preferred Jeremy is Siegel.

https://markets.businessinsider.com/news/stocks/jeremy-siegel-wharton-stocks-inflation-federal-reserve-interest-rates-recession-2022-8

https://markets.businessinsider.com/news/stocks/jeremy-siegel-fed-inflation-rate-hike-tightening-economy-2022-9

[monabri]

When it comes to predictions on financial matters, I'd go with Clarkson.

[Mike4]

Interesting read from Jeremy Grantham about the ending of the three “Super Bubbles” in Equities, Bonds, and Housing.

He seems to be forecasting falls of at least 50% in the S&P, and the same in house prices.

https://www.gmo.com/americas/research-l ... final-act/

https://www.zerohedge.com/markets/prepa ... -yet-burst

From the thread title one would think everything stops one we get the "falls of at least 50% in the S&P, and the same in house prices".

Why would it be a "final act"? Surely there will be an 'afterwards', and then the only way will be up!

[monabri]

https://en.m.wikipedia.org/wiki/Jeremy_Grantham

"GMO had more than US$118 billion in assets under management as of March 2015. GMO has seen this number half to US$65 billion in assets under management as of Dec 2020"

How does one end up with a large reduction in AUM? The US market has done rather well in recent years, for AUM to decrease by such an amount must indicate that folk were not happy with his fund mgt. The rising market would mask the sums being pulled out from GMO's management, so the true extent of withdrawals must have been a concern!

(Perhaps he should have simply dumped all GMO's assets in a S&P500 tracker over 2015 to 2022? )


If he's correct..doesn’t that mean GMO's AUM will shrink further or is he moving these assets into $?

[monabri]

According to the Fool (US)

https://www.fool.com/investing/2022/08/ ... ery-stock/

"Grantham has been expecting stocks to "crack" since 2011 on the belief the Federal Reserve was creating the bubble. Over the ensuing decade, stocks nearly quadrupled in value, turning a $10,000 investment in the S&P 500 in into one worth almost $38,000."


- The article is about Mike Burry's move into investing in the GEO Group, which according to wiki

https://en.wikipedia.org/wiki/GEO_Group

"The GEO Group, Inc. (GEO) is a publicly traded C corporation that invests in private prisons and mental health facilities in North America, Australia, South Africa, and the United Kingdom."

[Tara]

Interesting read from Jeremy Grantham about the ending of the three “Super Bubbles” in Equities, Bonds, and Housing.

He seems to be forecasting falls of at least 50% in the S&P, and the same in house prices.

https://www.gmo.com/americas/research-l ... final-act/

https://www.zerohedge.com/markets/prepa ... -yet-burst

From the thread title one would think everything stops one we get the "falls of at least 50% in the S&P, and the same in house prices".

Why would it be a "final act"? Surely there will be an 'afterwards', and then the only way will be up!

He means the final act of the Super bubbles. Before they burst.

[Mike4]

Interesting read from Jeremy Grantham about the ending of the three “Super Bubbles” in Equities, Bonds, and Housing.

He seems to be forecasting falls of at least 50% in the S&P, and the same in house prices.

https://www.gmo.com/americas/research-l ... final-act/

https://www.zerohedge.com/markets/prepa ... -yet-burst

From the thread title one would think everything stops one we get the "falls of at least 50% in the S&P, and the same in house prices".

Why would it be a "final act"? Surely there will be an 'afterwards', and then the only way will be up!

He means the final act of the Super bubbles. Before they burst.

And what then?

Does he hold that time stops? Or what happens after the burst?

It really isn't clear what you bears hold will happen next, once all shares and property get down to the forecast 50% value.

[Bubblesofearth]

He means the final act of the Super bubbles. Before they burst.

Isn't taking a huge risk telling everyone? Surely he would be better off keeping quiet and making a fortune from the fall?

BoE

[Tara]

Interesting read from Jeremy Grantham about the ending of the three “Super Bubbles” in Equities, Bonds, and Housing.

He seems to be forecasting falls of at least 50% in the S&P, and the same in house prices.

https://www.gmo.com/americas/research-l ... final-act/

https://www.zerohedge.com/markets/prepa ... -yet-burst

From the thread title one would think everything stops one we get the "falls of at least 50% in the S&P, and the same in house prices".

Why would it be a "final act"? Surely there will be an 'afterwards', and then the only way will be up!

He means the final act of the Super bubbles. Before they burst.

And what then?

Does he hold that time stops? Or what happens after the burst?

It really isn't clear what you bears hold will happen next, once all shares and property get down to the forecast 50% value.

I think he is forecasting a fall of at least 50% as he is saying that this is the biggest stock market bubble, bond bubble, and housing bubble in history.

Yes when the stock market finally reaches the bottom, it obviously starts to rise again. Just like all the previous stock market or housing bubbles after they have burst.

He does not know and no one else knows when the bottom will be reached, but he seems to think that this bubble is as bad as 1929.

In 1929 the stock market fell by over 90% from peak to bottom.

[Bubblesofearth]

He does not know

My key take-out from the links.

BoE

[monabri]

Oh, we'd better pull all our money out of his funds then before the market crashes.....

[Tara]

He does not know

My key take-out from the links.

BoE

This applies to everyone. No one in the world has a clue what level the stock market will be at in six months or one year.

He has however correctly predicted previous bubbles in the US that most other economic and “professional” forecasters did not see, and so his forecasts and predictions are probably just as valuable as those from any other person.

[DrFfybes]

This applies to everyone. No one in the world has a clue what level the stock market will be at in six months or one year.

He has however correctly predicted previous bubbles in the US that most other economic and “professional” forecasters did not see, and so his forecasts and predictions are probably just as valuable as those from any other person.

I haven't been following him, but the question that this raises for me is how often did he forecast bubbles that didn't burst?

[Mike4]

He does not know

My key take-out from the links.

BoE

This applies to everyone. No one in the world has a clue what level the stock market will be at in six months or one year.

He has however correctly predicted previous bubbles in the US that most other economic and “professional” forecasters did not see, and so his forecasts and predictions are probably just as valuable as those from any other person.

Have a think about this.

Imagine you want to build a small following of people who think you are the Messiah with vision of the future. You buy a big mailing list of contacts, and you pick a portfolio of stocks.

You divide the mailing list in half. You mail one half with a forecast that the portfolio will rise in value in three months, and you mail the other half with a forecast that your portfolio will fall.

Whichever happens, you discard the mailing list you got wrong and mail the list you got right crowing about your brilliance.

Now you mail the second list with another forecast. Half your mails forecast a fall, the other half forecast a rise. One half will be right and the other half wrong. Then do it again, and again, and again.

After five cycles of this you'll have a track record with a very small sample of recipients who are totally convinced of your infallibility, having got it right five times in a row (for them specifically).

This should hopefully open your eyes about how your "He has however correctly predicted previous bubbles in the US" could actually happen....

[Tara]

He does not know

My key take-out from the links.

BoE

This applies to everyone. No one in the world has a clue what level the stock market will be at in six months or one year.

He has however correctly predicted previous bubbles in the US that most other economic and “professional” forecasters did not see, and so his forecasts and predictions are probably just as valuable as those from any other person.

Have a think about this.

Imagine you want to build a small following of people who think you are the Messiah with vision of the future. You buy a big mailing list of contacts, and you pick a portfolio of stocks.

You divide the mailing list in half. You mail one half with a forecast that the portfolio will rise in value in three months, and you mail the other half with a forecast that your portfolio will fall.

Whichever happens, you discard the mailing list you got wrong and mail the list you got right crowing about your brilliance.

Now you mail the second list with another forecast. Half your mails forecast a fall, the other half forecast a rise. One half will be right and the other half wrong. Then do it again, and again, and again.

After five cycles of this you'll have a track record with a very small sample of recipients who are totally convinced of your infallibility, having got it right five times in a row (for them specifically).

This should hopefully open your eyes about how your "He has however correctly predicted previous bubbles in the US" could actually happen....

Anyone can ignore what he is saying if they want.

But with the S&P on a PE of 30, at about double the historic average, and with interest rates steadily rising from historic lows, his prediction of a fall of at least 50% in the S&P probably seems quite reasonable to many people.

https://www.multpl.com/shiller-pe

[CliffEdge]

He does not know

My key take-out from the links.

BoE

This applies to everyone. No one in the world has a clue what level the stock market will be at in six months or one year.

He has however correctly predicted previous bubbles in the US that most other economic and “professional” forecasters did not see, and so his forecasts and predictions are probably just as valuable as those from any other person.

Have a think about this.

Imagine you want to build a small following of people who think you are the Messiah with vision of the future. You buy a big mailing list of contacts, and you pick a portfolio of stocks.

You divide the mailing list in half. You mail one half with a forecast that the portfolio will rise in value in three months, and you mail the other half with a forecast that your portfolio will fall.

Whichever happens, you discard the mailing list you got wrong and mail the list you got right crowing about your brilliance.

Now you mail the second list with another forecast. Half your mails forecast a fall, the other half forecast a rise. One half will be right and the other half wrong. Then do it again, and again, and again.

After five cycles of this you'll have a track record with a very small sample of recipients who are totally convinced of your infallibility, having got it right five times in a row (for them specifically).

This should hopefully open your eyes about how your "He has however correctly predicted previous bubbles in the US" could actually happen....

Anyone can ignore what he is saying if they want.

But with the S&P on a PE of 30, at about double the historic average, and with interest rates steadily rising from historic lows, his prediction of a fall of at least 50% in the S&P probably seems quite reasonable to many people.

https://www.multpl.com/shiller-pe

Except, this time it's different...

[DrFfybes]

Anyone can ignore what he is saying if they want.

But with the S&P on a PE of 30, at about double the historic average, and with interest rates steadily rising from historic lows, his prediction of a fall of at least 50% in the S&P probably seems quite reasonable to many people.

https://www.multpl.com/shiller-pe

Thething is, people don't want to believe a 50% fall is coming. Especially not investors. The idea that half the value of the World's companies could be wiped out is just inconceivable to people, it can't happen, I mean, you know, that's, like, a LOT. I know it is a possibility, and it has happened in the past, but why 50%? Why not 80%, or 66.666%, or 52%? It basically sounds like he's picked a round number out of the air to get attention.

Now if he'd said a 20-25% fall, firstly I'd be much more inclined to believe him, and secondly I wouldn't be bothered.

[ReformedCharacter]

...I know it is a possibility, and it has happened in the past, but why 50%? Why not 80%, or 66.666%, or 52%? It basically sounds like he's picked a round number out of the air to get attention.

Now if he'd said a 20-25% fall, firstly I'd be much more inclined to believe him, and secondly I wouldn't be bothered.

He's said that too, in July

Grantham, co-founder and chief investment strategist of Grantham, Mayo, van Otterloo & Co., told The Associated Press recently that fair value for the S&P 500 a year from now would be “pretty close to 3,000” — a roughly 24% decline from its value in Friday afternoon trading.

https://fortune.com/2022/07/20/jeremy-g ... perbubble/

RC

[Bubblesofearth]

Have a think about this.

Imagine you want to build a small following of people who think you are the Messiah with vision of the future. You buy a big mailing list of contacts, and you pick a portfolio of stocks.

You divide the mailing list in half. You mail one half with a forecast that the portfolio will rise in value in three months, and you mail the other half with a forecast that your portfolio will fall.

Whichever happens, you discard the mailing list you got wrong and mail the list you got right crowing about your brilliance.

Now you mail the second list with another forecast. Half your mails forecast a fall, the other half forecast a rise. One half will be right and the other half wrong. Then do it again, and again, and again.

After five cycles of this you'll have a track record with a very small sample of recipients who are totally convinced of your infallibility, having got it right five times in a row (for them specifically).

This should hopefully open your eyes about how your "He has however correctly predicted previous bubbles in the US" could actually happen....

An alternative, but related, phenomenon is that many investors, fund managers etc cry 'bubble' a lot. Just by the law of big numbers many will have called the Japan bubble. After being 'proven' right a percent of these will also have called the tech bubble. These guys have been 'proven' right twice and, again, a percent of these will get the 2008 crash as well. Start with a big enough number and, even after 3 crashes, there will still be plenty left who have now been right 3 times. Gurus or simply a product of statistics?

I'd go back to my previous comment, if this guy s so sure about the coming crash then why broadcast it? Why not keep shtum and make a fortune in the derivatives markets?

BoE