Jeremy Grantham’s Market Update

GMO’s Jeremy Grantham predicts that in five years the U.S. market may be 20% lower but that due to a “series of advances and retreats” rather than due to a sharp crash. This according to a recent article in The Economist. The article reports that Grantham, who is known for his caution regarding long-term returns, “caused a stir earlier this year when he said the chances were high of a melt-up in the markets this… Read More

Jeremy Grantham Says Market Has More Upside

In a recent essay, GMO co-founder and chief investment strategist Jeremy Grantham offered insights on the market by “looking very hard at all the great bubbles of the past,” and “searching for useful guides to the future.” His commentary was excerpted in Barron’s. While Grantham agrees that today’s market is priced “exceptionally high,” he says the typical examples of past bubbles are “not just characterized by higher-than-average prices.” Indicators of “extremes of euphoria” he says,… Read More

Four Top Fund Managers Advise Caution in 2018

A recent Bloomberg article shares market insights from six of the world’s top fund managers, four of which are “asking their clients to be cautious in 2018.” The four with cautious outlooks are: Scott Minerd, chief investment officer at Guggenheim Partners (manages $240 billion), is betting that the next recession is most likely going to occur in late 2019 to mid-2020. Minerd’s firm argues that current macroeconomic conditions are similar to those that existed 18-24 months prior… Read More

Does GMO’s Jeremy Grantham See a Bubble Coming?

GMO’s Jeremy Grantham says stocks and bonds will “fail to generate inflation-beating returns over the next seven years, but he doesn’t see an imminent crash in share prices,” according to a recent article in The Wall Street Journal. The article says that Grantham, who predicted bubbles in 2000 and 2007, argues that while current stock valuations are high, they are supported by healthy profit margins. Further, he believes that the Fed’s low interest rate policy… Read More

Grantham Sets the Record Straight

In a recent Barron’s article, Boston-based asset management firm GMO’s co-founder Jeremy Grantham sets the record straight after what he calls “a few misquotes and misunderstandings by journalists.” The journalists, writes Grantham, implied that he believes high share prices are here to stay and that “regression to the mean has ended. This is, of course,” he asserts, “inaccurate, as readers of my quarterly letters know.” Grantham emphasizes his belief that the speed of mean regression… Read More

Grantham Says Higher Valuations Will Remain

“The market can stay irrational longer than the investor can stay solvent”, writes Jeremy Grantham in a recent Barron’s article. Grantham addresses the fact that, since 1996, the market mean PE ratio has risen by 65% to 75%. He covers various periods in history, respective rises and crashes, showing that while there are always oscillations they have settled at a much higher PE: He also notes that profit margins have grown by 30% and represent… Read More

Jeremy Grantham on the Next Big Investment Drivers

In a recent interview with Wealth Management.com, the founder of management firm GMO shared his insights on how the market has changed and where opportunities are going forward. Between 1935 and 2000, says Grantham, the market was “orderly” and experienced “mean reversion,” but it has since become more complicated. “Since 1998, price-earnings ratios have averaged 60 percent higher than the prior 50 years, and profit margins have averaged 20 to 30 percent higher. That’s a… Read More

Grantham: Current Market is an “Anti-Bubble”

The U.S. market is unlikely to “go bang” the way some have in the past, says Jeremy Grantham, chief investment strategist and co-founder of asset management firm GMO. In a recent Barron’s article, Grantham argues that we are not facing a “classic bubble, not even close.” In Grantham’s opinion, it is more likely that a correction, or mean reversion, will be “slow and incomplete,” leading to “dismal consequences for investors: we are likely to limp… Read More

“Presidential Cycle” Stunted by the Fed says Grantham

The phenomenon of robust stock market gains during the third year of a president’s term—coined the “presidential cycle” by fund manager Jeremy Grantham—may have been “killed off” by the Fed, according to an article in the Financial Times. Research conducted by Grantham, founder of the GMO fund management group in Boston, analyzed stock gains during the first, second and fourth years of presidential terms going back to 1932 and found that average gains during those… Read More

Jeremy Grantham’s Outlook for 2016 and Beyond

Jeremy Grantham authored a piece for Barron’s recently in which he argues that “the positive effects of low resource prices are underestimated,” maintains that we are not in a bubble and thus “a major market break [is] unlikely” to occur yet,  and suggests that the longer-term forecast is “rather depressing.” Looking back at 2015, Grantham highlights “the big positive” of Federal Reserve support and “the big negative” of “China slowing down,” as well as “the… Read More