“
“We will have a few weeks of extra money and a few weeks to put your last desperate chips in the game and then an even more spectacular bust … When you reached this level of obvious super enthusiasm, the ball had always, without exception, broken in the next few months, not a few years.
”
This is the latest from Jeremy Grantham, co-founder and chief investment strategist of Boston money manager Grantham, Mayo, Van Otterloo & Co., giving a strict warning to speculators leading the stock market to new heights in the midst of the biggest pandemic. of the last century.
In an interview with Bloomberg TV’s Front Row, the well-known investor, who has often been credited with several market calls over the past two decades, insists on a steady rise in stocks, boosted by free money from the Federal Reserve and by the government’s fiscal budget. stimulus, can not continue without consequences.
“If you think you live in a world where production doesn’t matter and you can only create paper, sooner or later you will do the impossible and that will bring inflation back,” Grantham warned.
This is far from the first word of caution that Grantham has sounded in recent weeks, but now points to the $ 1.9 trillion coronavirus aid package proposed by newly inaugurated US President Joe Biden as an additional reason for a possible explosion. of the balloon.
Grantham deserves attention because of his early calls over the years. He said stocks were overvalued in 2000 and again in 2007, anticipating these market recessions, reports The Wall Street Journal. Grantham also pointed out that financial market elements had become uncovered by the reality that led to the 2008-09 financial crisis.
However, GMOs severely followed the S&P 500 SPX index,
in 2020, according to a Bloomberg News report on Tuesday.
In June, Ben Inker, one of GMOs’ chief investment officers, told investors it was time to sell shares in a client letter quoted by Bloomberg. Inker suggested to Bloomberg that investing is not an easy game.
Meanwhile, US actions have defied Grantham’s prognosis and rising gravity. Nasdaq Composite Composite Index,
DJIA Industrial Dow Jones,
and the S&P 500 is trading near historic highs.