Calling a Super Bubble: Front Row With Jeremy Grantham

[progree]

1. This is starting to sound like the Economy Group - where they've been screeching bubble bubble since

Last edited Sun Jan 30, 2022, 12:46 AM - Edit history (1)

at least before 2014. And no doubt, like a broken clock, they are inevitably right, there will be a market crash, some day, some year. We just don't know when. And how many market doublings will we miss out of for fear of one TEMPORARY halving?

Jeremy Grantham has been predicting epic market crashes for a decade. Here's why he could be wrong again, Henry Roberson, Business Insider, 1/26/22

Legendary investor Jeremy Grantham has been the talk of Wall Street this week after saying an epic "superbubble" in markets is about to implode, just as stocks started tanking.

Yet Grantham has been issuing similar warnings for years, during which time markets have soared.

The founder of investment company GMO said in November 2010 that he thought the Fed was creating a bubble and that stocks could "crack" in 2011 or 2012. Since then, S&P 500 has risen more than 260% ((that's a 3.60-fold increase, a TEMPORARY halving of that would leave us with a 1.80-fold increase at the bottom -Progree. Late late edit: Important clarification: the 3.60-fold increase doesn't include reinvested dividends. With reinvested dividends, it's a 4.55-fold increase over 11.20 years, which is a 14.49% annualized average return. A TEMPORARY halving would take it down to a 2.28 fold increase -- a 7.6% annualized average return at the bottom. End Late Edit -Progree )).

He said in January 2018 that "we are currently showing signs of entering the blow-off." The S&P 500 has since rallied 60%.

Grantham repeated his bubble warnings in June 2020 and in January 2021. Last week, he said the S&P 500 is likely to plunge almost 50%.

More: https://www.msn.com/en-us/money/markets/jeremy-grantham-has-been-predicting-epic-market-crashes-for-a-decade-here-s-why-he-could-be-wrong-again/ar-AATauF7?ocid=msedgdhp&pc=U531

Though admittedly I got caught up in the bubble bubble bubble panic early last December:

Word to the wise: the crash is coming, get out of the stock market now, 12/2/21 ⚠ 👀 😱
https://www.democraticunderground.com/11213498


As for a "long-term view of markets", well, this is my long-term view

I Imgur'd this graph from Yahoo Finance at near the bottom of the Covid crash. I try hard to keep the "long-term view of markets" in mind. Those were some mighty frightful crashes. The thing is, after several doublings, a 50% "crash" just gets rid of one of those doublings.



In the above graph, the S&P 500's last point is 2305. It closed today, Friday 1/28/22, at 4432, 1.92 fold higher, another tick-mark to add to the graph. Almost the same vertical distance as between the 884 and 1684 points (its on a logarithmic scale where a doubling, for example, or any X percent increase, is the same vertical distance throughout the date range). The 4432 point would be at about where the bottom of the box that says "Sign up now: E*TRADE" is.

Note also this graph is just the price change. It ignores dividends. It would be several times higher if dividends were considered and reinvested.

Here is the S&P 500 with dividends reinvested since 1928: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
For $100 invested at the start of 1928. it went to $762,000 in 2021, a 7,620-fold increase