The US is in one of the greatest bubbles in financial history
“Industry has become more monopolistic and concentrated than ever before”
“Today, it is clear to me that this is the most dangerous package of overpriced assets we have ever seen in the US. [Bond guru] Jim Grant would say that we have the most overpriced fixed-income market in the history of man.
“That, combined with an equity market that can easily lose $5trn or $10trn, depending on the magnitude of the break, is a contender for the highest-priced market in American history.” The result could be “a writedown in perceived wealth that would have no precedent”.
So wrote Jeremy Grantham, co-founder and chief investment strategist of Boston-based asset management group Grantham, Mayo, Van Otterloo (GMO), a few months ago. It’s a dramatic prediction from a man with a history of getting things right. For instance, he rightly dismissed the 2003-2007 stockmarket rally as “the greatest sucker rally in history”, warned that the housing bubble of the mid-2000s would burst, and turned positive on stocks in March 2009.
So when we talk on the MoneyWeek) this great bubble is one of the first things I ask him about. Just how big is it? And – given that the markets have looked expensive for a long time already – how might it end?
