Jeremy Grantham is among the most respected investors in the world as he has predicted some of the greatest market bubbles in modern history, including 1980s Japan’s asset price bubble, 90s dot-com bubble and US 2008 financial crisis.
He stated that the “superbubble”, which will be the 5th great bubble in the modern era, has yet to pop despite the stock market’s struggles. Jeremy claimed that global economics are facing fundamental deteriorations including China’s COVID-19 policy, Europe’s energy crisis, and the US Federal Reserve interest rate hike.
Grantham: Fed’s loose monetary policies drive a superbubble
Jeremy has been consistent in his argument that the Federal Reserve’s loose monetary policies for a long time will create a superbubble which is unprecedented. His prediction of the superbubble is consented by other Wall Street analysts, including Morgan’s Chief Investment Officer.
Jeremy stated that the bear market rally is misleading as he explained the stages of superbubbles. The market will reach a bear market rally before deteriorating to an all-time low.
Grantham: S&P 500 is set to be reduced by 50%
He warned that the S&P 500 is set to be reduced by 50% of its initial value, similar to the housing crisis in 2008. S&P 500 is down by 15% this year, and the tech stocks have also plummeted significantly. According to Jeremy Grantham, the decision by the US Federal Reserve to raise interest rates to combat inflation is a driver of the turbulence in the US stock market.
For Jeremy, the crash will come but there is a possibility that the crash can be well contained as it was in 2000, or to get completely out of hand like it did in the 30s. With Jeremy’s accurate predictions of the previous super bubble, his statement will certainly gain the attention of investors all around the world.
