Posted on 08/31/2022 7:53:00 PM PDT by lasereye
A “superbubble” appears dangerously near its “final act” after the recent rally in U.S. stocks lured some investors back into the market just ahead of potential “tragedy,” according to Jeremy Grantham, the legendary co-founder of Boston-based investment firm GMO.
Grantham, who has repeatedly warned investors of a bubble in markets, said in a paper Wednesday that “superbubbles are events unlike any others” and share some common features.
“One of those features is the bear-market rally after the initial derating stage of the decline but before the economy has clearly begun to deteriorate, as it always has when superbubbles burst,” said Grantham. “This, in all three previous cases, recovered over half the market’s initial losses, luring unwary investors back just in time for the market to turn down again, only more viciously, and the economy to weaken. This summer’s rally has so far perfectly fit the pattern.”
The U.S. stock market tumbled during the first half of 2022 as investors anticipated soaring inflation would lead to a hawkish Federal Reserve. The S&P 500 closed at a low this year of 3,666.77 on June 16, before surging over the summer along with other stock benchmarks amid investor optimism over signs that the highest inflation in decades was easing.
“The U.S. stock market remains very expensive and an increase in inflation like the one this year has always hurt multiples, although more slowly than normal this time,” Grantham said. “But now the fundamentals have also started to deteriorate enormously and surprisingly: Between COVID in China, war in Europe, food and energy crises, record fiscal tightening, and more, the outlook is far grimmer than could have been foreseen in January.”
Grantham had warned in a January paper that the U.S. was approaching the end of a “superbubble”.
(Excerpt) Read more at marketwatch.com ...
I’m looking for incredible drops in real estate prices.
Same, it’s currently ridiculous.
In a matter of less than 2-years, we are going to go from
Boom —> Recession —> Depression.
And it won’t just be restricted to the US, it will be global.
> A “superbubble” appears dangerously near its “final act”
(from Macbeth)
Double, double toil and trouble;
Fire burn and caldron bubble.
Fillet of a fenny snake,
In the caldron boil and bake;
Eye of newt and toe of frog,
Wool of bat and tongue of dog,
Adder’s fork and blind-worm’s sting,
Lizard’s leg and howlet’s wing,
For a charm of powerful trouble,
Like a hell-broth boil and bubble.
Double, double toil and trouble;
Fire burn and caldron bubble.
Cool it with a baboon’s blood,
Then the charm is firm and good.
3 words - housing bubble correction. Blackrock going to get a stake through its heart.
Are you looking to buy?
Sure. By all means invest in bonds and get hammered as interest rates rise. Or leave it in cash and get hammered by inflation. There is risk everywhere.
The stock market is a reasonable place to invest iIF one has a long investing time horizon.
How about bitcoin? It’s pretty low right now...lolol.
Yes. Whatchya got?
Because Interest rates rise and the underlying bonds lose value; People then redeem shares and the fund must then sell the now lower value bonds to cover the redemptions. That is why. Bond funds lose value when intrest rates rise. look it up.
We’ve been in bond funds since 1997. We’ve never seen it this bad in even the worst of markets. When you’re a conservative investor and have been for 20 years, what’s happened the past 18 months has been crippling.
A note to see what folks have to say about this. “Wealth lifts up on wings and flies away....” says the Bible.
Long overdue and needed to clear the deadwood, hurt the Democrats....I say let her rip a big crash!
Yeah, our plans to move to Arizona got sidetracked with the crazy price increases and bidding wars.
Are you interested in northern VA?
Interest rates should drop sharply in the next 6 months or so if Grantham is right.
Hell naw
Farther and farther into the boonies, where my only friends are angry bears and oversized mosquitos.
Besides, NoVa bans all the firearms I like.
Sloe Joe’s contribution to globull security!
And unity!
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