mind... In March 2009 – within days of the stock market bottom – Grantham said “buy.” He wrote a letter to his customers saying that stocks were worth “30% above today’s price.” Again, he got it exactly right. I love reading Grantham’s thoughts (even when I disagree with them) because he is an original thinker. He is willing to go against what everyone else is saying. So what does Grantham – the “bubble guru” – say about the likelihood of a stock market bubble today? You might think the guy known for spotting bubbles would be looking for one today. Since March 2009, the stock market has gone up – practically uninterrupted – for eight years. We’ve got to be hitting “bubble” proportions – right? Not so fast. Grantham gave the Wall Street Journal his opinion last week – and what he said surprised me. Here’s what he told the Journal about the U.S. stock market today:
Where is the market going next? When will it peak? And when will the “bubble” burst?
I’m sure you’re asking these questions... But who are you looking to for answers? I like to look to the guy who called the last major stock market top and bottom, with amazing accuracy... Jeremy Grantham is a 78-year-old Englishman best known for studying stock market bubbles more thoroughly than anyone, ever. He’s the co-founder of GMO, an investment- management firm in Boston. In 2000, Grantham called the stock market peak – with incredible detail... That year, he gave an interview in Outstanding Investor Digest titled “Bubbles have always given back everything. There have been no exceptions – NONE.” In it, Grantham delivered a dissertation on exactly why, and exactly how, the stock market crash would unfold. He got it
EXACTLY right. At the time, nobody wanted to believe him. He was labeled a “perma bear” – someone who always looks for the negative in the markets. But he was just calling it like he saw it. In late 2008 – near the bottom of one of the worst nine-year runs in stock market history – Grantham became incredibly optimistic. That time, he was the lone “bull” among “bears.” He wrote: For an unparalleled 20 years, [stocks]
have been overpriced. Now, finally, they are cheap and likely to get cheaper. Likely, I believe, to set up a once-in-a-lifetime investing opportunity (or maybe twice in a long career).
Finally, stocks appeared to hit bottom in Grantham’s
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