Notable investor Jeremy Grantham is doubling down on his bubble call, saying the conditions in the stock market right now are even crazier than previous speculative periods before the crashes in 1929 and 2000. "Equities is magnificent bubble in the U.S.," Grantham, co-founder of GMO, told CNBC's Wilfred Frost on Tuesday in an interview which aired on " Closing Bell ." "This has been crazier by a substantial margin than 1929 and 2000, in my opinion. We've met all of those conditions. So anytime now you can go. And the end of a bubble is like killing off a vampire." Grantham is a widely followed investor and market historian with a track record of identifying market bubbles. He foresaw the 2008 market downturn and the dot-com bubble bursting in 2000. The investor said bubbles tend to be three years up and three years down — six years in total. The stock market has pulled off a rapid rebound from the pandemic shock with the S & P 500 coming all the way back from its March 2020 bottom in the span of several months. The broad equity benchmark is up about 16% year to date, about 4% below its all-time high reached in early September. Stocks suffered a steep sell-off Tuesday, with the tech-heavy Nasdaq Composite shedding 2.8% for its worst day since March. Surging Treasury yields prompted investors to dump high-flying technology shares, while overall sentiment was also hit by the budget stalemate in Washington. The S & P 500 lost 2%, while the blue-chip Dow Jones Industrial Average dropped nearly 570 points. The S & P 500′s forward price-to-earnings ratio, a widely used valuation metric on Wall Street, currently sits around 22. That's near the highest level since the early 2000s, according to FactSet. "You'd have 1929 bubble, 2000, and today. That would be perfect, three times squeezed into a century," Grantham said. "They feel like bubbles. And they tend to last about six years, and you measure them from when they leave the trend until when they get back to trend." For signs of a market bubble, Grantham pointed to everything from the meme stock mania, to SPACs and to cryptocurrencies. "The meme stocks are just a travesty of serious investing. We've never seen anything to equal that," Grantham said. "They were hundreds of millions, not tens of billions, which are the crazy SPACs this time. Not to mention all the bitcoins of the world, which are a couple of trillion dollars, all based on confidence that other people will pay for what you have."
Jeremy Grantham, co-founder and Long-Term Investment Strategist of Grantham Mayo van Otterloo.
Source: The Years Project | SHOWTIME
Notable investor Jeremy Grantham is doubling down on his bubble call, saying the conditions in the stock market right now are even crazier than previous speculative periods before the crashes in 1929 and 2000.