Jeremy Grantham is famous for spotting stock market crashes before they occur. The next one will be a doozy, he predicts.
One of Wall Street's most influential voices, the British investor Jeremy Grantham, sees an asteroid steaming toward global financial markets. His term for what he sees as a growing threat to U.S. investors: a"superbubble."
"[F]or the first time in the U.S. we have simultaneous bubbles across all major asset classes," Grantham, co-founder of wealth management firm GMO, said this week in anOver the last 100 years, the U.S. has experienced three previous superbubbles, according to Grantham: The crash of 1929, which triggered the Great Depression; the dotcom meltdown that began in 2000; and the housing bust that precipitated the global financial crisis that started in 2008.
Exhibit C: Fewer and fewer equities, usually blue-chip stocks, perform well, while a growing number of speculative stocks do poorly. That trend — also visible in 1929 and 2000 — may be due in part to professional investors crowding into safer stocks as they see the broader market blindly marching off the cliff, Grantham suggested. In this scenario, confidence first starts to erode for riskier assets and then eventually dominoes into healthier stocks as investors race for the exits.
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