Home Business ‘The big crash has begun, the S&P 500 will go down 45%.’ Jeremy Grantham has no doubts and lists all the symptoms of the super bubble

‘The big crash has begun, the S&P 500 will go down 45%.’ Jeremy Grantham has no doubts and lists all the symptoms of the super bubble

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Jeremy Grantham, an investor famous for calling market bubbles, yesterday said that the historic stock crash he predicted a year ago is underway and even Federal Reserve intervention cannot prevent a collapse of almost 50%. Grantham, co-founder of Boston’s GMO wealth manager, describes US equities as being in a “super bubble”.

As happened in the crash of 1929, the dot-com crash of 2000 and the financial crisis of 2008, the investor is certain that this bubble will burst. This implies in his view that the S&P 500 will fall roughly 45% since the close on Wednesday – and 48% since the peak on January 4 – to a level of 2,500 points.

From very likely (a year ago) to almost certain today

“I wasn’t as sure about this bubble a year ago as I was in the 2000 tech bubble, or as I was in the 2007 housing bubble,” Grantham said in an interview with Bloomberg. “But I felt it was very likely, but perhaps not nearly certain. Today, I feel it is almost certain ”.

In Grantham’s analysis, the first sign of difficulty came last February, when dozens of the most speculative stocks began to decline. A proxy, theArk Innovation ETF by Cathie Wood, since then it is collapsed by 52%. Subsequently, the Russell 2000, a mid-cap stock index that typically outperforms in a bull market, followed the S&P 500 in 2021.

From stock memes to dogecoin, the irrational behavior of investors

Grantham also mentions the “Crazy investor behavior”, indicative of an advanced stage bubble. Hint of this are phenomena such as the rush to meme stock, the frenzy of buying EVs (electric car companies), the rise of ‘nonsense’ cryptocurrencies such as dogecoin e multimillion dollar Non-fungible token (NFT) prices

Grantham is considered among the foremost experts on the equity, bond and commodity markets and is known, in fact, also for having managed to predict several bolle speculative.

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