In the end, the money tends to transfer from the amateurs to the professionals.Ī: It started off as a fairly straightforward U.S.-based bubble and looked like a dead ringer for the 2000 tech bubble. Following the stimulus from COVID and the ultralow rates and the accommodation from the Federal Reserve, they all got together and multiplied the effect and created a perfect environment for speculating.Īnd people were at home, bored out of their minds and getting a check from the government, so why not speculate? They found on the web many ways of doing it, superficially cheaply, but that kind of investing has always turned out to be for most people incredibly expensive. Q: You said early this year that we’re in a “super-bubble.” Why?Ī: Because we have been through one of the great speculative periods. And maybe it will happen sooner or later in this cycle. It happened in the 1930s, a chunk of the 1970s, a bit in 2. It gets so painful people don’t care anymore, and they don’t want to see another stock as long as they live. That kind of super bull market thinking carries prices way over reality.Īnd then about 5% of the time, they get carried away on the downside. About 15% of the time - quite a lot - it gets carried away on the upside and starts to price things based on wishful thinking and because they’re going up. Were they wrong to think they were doing the right thing?Ī: In the long, long run, diversification and keeping the costs down with index funds and so on is the best you can do.Įighty percent of the time, the market is pretty sensible and related to the reality of profits and, loosely speaking, the economy. Q: People are hurting, even those who invested in a mix of stocks and bonds instead of rolling the dice on just a few high-risk stocks. The conversation has been edited for length and clarity. He spoke recently with The Associated Press about his “super bubble” call. But he’s also been optimistic about markets in the past, including in early 2009, when stocks began to recover from the financial crisis. Grantham’s critics say he’s always bearish and gets lucky when the pendulum finally swings the other way. ![]() stocks in the summer of 2020, when Wall Street was roaring back from its coronavirus crash. The co-founder of the GMO investment firm began warning of potential excess in U.S. ![]() housing market before the 2008 financial crisis. Grantham has correctly predicted the bursting of some of the financial world’s most spectacular bubbles, starting with Japanese stocks and real estate in the late 1980s and running through the U.S. INDYCAR: 2023 Indianapolis 500 pres.NEW YORK (AP) - Early this year, with the S&P 500 near its all-time high, famed investor Jeremy Grantham warned that stocks were in a “super bubble.” Since then, their prices have fallen about 20%, and Grantham says they can still drop more. ![]() NASCAR Cup: Verizon 200 at the Brickyard.Don’t miss your favorite athletes as they aim to be the first to conquer the legendary Brickyard in 2022! This family-friendly event will get you closer than ever to the twists and turns of the 14-turn, 2.439-mile track. The Month of May shifts into gear May 13-14 as the stars of the NTT INDYCAR SERIES take on the action-packed IMS road course for the GMR Grand Prix.
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