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Jeremy Grantham: The U.S. Market Is in a Super Bubble

The GMO strategist and perma-bear thinks the major asset classes are inflated but calls value stocks 'pretty darn cheap.'

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Our guest this week is Jeremy Grantham. Jeremy is the long-term investment strategist at his namesake firm, Grantham, Mayo, Van Otterloo & Co., or GMO, which he cofounded in 1977. He serves on GMO's Asset Allocation Committee and board of directors. Prior to GMO, Jeremy was cofounder of Batterymarch Financial Management and before that was an economist at Royal Dutch Shell. He earned his undergraduate degree from the University of Sheffield and his MBA from Harvard University. Jeremy is a member of the Academy of Arts and Sciences, holds a CBE from the U.K., and is a recipient of the Carnegie Medal of Philanthropy.

Background

Bio

10 Things You Didn’t Know About Jeremy Grantham,” by Allen Lee, moneyinc.com.

Bubbles

Three-Sigma Limits Definition

Let the Wild Rumpus Begin,” by Jeremy Grantham, gmo.com, Jan. 20, 2022.

‘Super Bubble’: Jeremy Grantham Says Historic Crash Has Begun,” by Clayton Jarvis, financialpost.com, Jan. 25, 2022.

Market ‘Superbubble’ Could Lead to 50% Plunge, Says Grantham,” by Lawrence Carrel, forbes.com, Jan. 26, 2022.

GMO’s Grantham: 7 Signs We’re in a Stock Collapse (And What to Do Now),” by Janet Levaux, thinkadvisor.com, Jan. 24, 2022.

Is the Plunge in the Nasdaq and Bitcoin the end of the ‘Superbubble’”? by John Cassidy, newyorker.com, Jan. 24, 2022.

The U.S. Is in One of the Greatest Bubbles in Financial History,” by Merryn Somerset Webb, moneyweek.com, Sept. 3, 2021.

Grantham Calls Meme Stocks ‘Biggest U.S. Fantasy Trip,’” Kriti Gupta and John Authers, Bloomberg.com, June 22, 2021.

Profiting From a Bubble in Growth Stocks,” by Jeremy Grantham, Simon Harris, Ben Inker, and Catherine LeGraw, gmo.com, March 25, 2021.

Nikkei Back Above 30,000 After More Than Three Decades,” by Hideyuki Sano, reuters.com, Feb. 14, 2021.

Waiting for the Last Dance,” by Jeremy Grantham, gmo.com, Jan. 5, 2021.

COVID-19, Climate Change, and the Need for a New Marshall Plan,” by Jeremy Grantham, gmo.com, Oct. 30, 2020.

Forecast

GMO 7-Year Asset Class Forecast: 4Q 2021

Why Are Stock Market Prices So High?” by Jeremy Grantham, GMO Quarterly Letter, gmo.com, 2017.

Loose Monetary Policy Is Today’s Biggest Market Risk,” by John Plender, ft.com, April 14, 2021.

An Investment Only a Mother Could Love: The Tactical Case,” by Jeremy Grantham and Lucas White, gmo.com, April 30, 2020.

Innovation, Venture Capital, and Green Investing

Grantham Stumbles on $200m Profit After Spac Swoop on Battery Maker,” by Robin Wigglesworth and Eric Platt, ft.com, Dec. 7, 2020.

Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever, by Robin Wigglesworth.

You Can’t Fool All the People All the Time,” by Jeremy Grantham, jpm.pm-research.com, Winter 1986.

Green Investing May Be a Bubble, Jeremy Grantham Says, But He’s Doubling Down,” by Ben Steverman, fa-mag.com, Nov. 15, 2021.

Where Jeremy Grantham Expects to Be ‘Kicking Ass,’” by Christine Idzelis, institutionalinvestor.com, Feb. 13, 2020.