Stock legend sees a few weeks of “putting your last desperate chips in the game,” then pop



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“We’ll have a few more weeks of extra cash and a few weeks to put your last desperate chips in the game, then an even more spectacular bust… When you reach that level of obvious super-enthusiasm, the bubble has always, bar none, broken. in the next few months, not a few years.


– Jeremy Gratham

This is the latest from Jeremy Grantham, co-founder and chief investment strategist at Grantham, Mayo, Van Otterloo & Co., a Boston-based financial manager, offering a stern warning to speculators leading the stock market to new highs at the middle of the biggest pandemic of the last century.

In an interview with Bloomberg TV’s “Front Row,” the legendary investor, who is often credited with several premonitory market calls over the past two decades, insists that a steady rise in stocks, favored by the free money from the Federal Reserve and stimulus public finances, can not continue without consequences.

“If you think you’re living in a world where production doesn’t matter and where you can just create paper, sooner or later you’re going to do the impossible, and that’s bringing back inflation,” warned Grantham.

This is far from the first word of warning Grantham has issued in recent weeks, but he is now pointing to the $ 1.9 trillion coronavirus relief package offered by newly inaugurated US President Joe Biden as the reason addition of a possible bursting of the bubble.

Grantham deserves special attention because of his visionary appeals over the years. He said stocks were overvalued in 2000 and again in 2007, anticipating these market downturns, the Wall Street Journal reports. Grantham also reported that elements of the financial market were no longer grounded in reality that led to the 2008-09 financial crisis.

However, GMOs lagged far behind the S&P 500 SPX index,
-0.30%
in 2020, according to a Bloomberg News report on Tuesday.

In June, one of GMO’s top investment agents, Ben Inker, told investors it was time to sell shares, in a letter to a client, cited by Bloomberg. Inker suggested to Bloomberg that investing is not an easy game.

US stocks, meanwhile, defied the bearish prognosis and gravity of Grantham. The Nasdaq COMP composite index,
+ 0.09%,
the Dow Jones Industrial Average DJIA,
-0.57%
and the S&P 500 Index are all trading near historic highs.

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