Jeremy Grantham, founder of Boston-based asset management firm Grantham, Mayo & Van Otterloo (GMO), believes the Standard & Poor’s 500 (S&P 500) could fall another 26 percent over the next 12 months, according to a veteran report. Investor made last week. The GMO co-founder outlined his sentiments by noting that he is shorting junk bonds and the Nasdaq composite.
GMO co-founder’s shock at ‘fundamentals breakdown’ – ‘Central banks will be angry, they will do what they can, maybe’
Investor and GMO co-founder Jeremy Grantham’s outlook for the stock market is bleak, telling the Reuters Global Markets Forum on Wednesday that things could be worse than the subprime mortgage fiasco 15 years ago. “This is the year “This is a more dangerous time in the global economy than the housing bubble madness of 2007,” Grantham commented at a Reuters event. Grantham is a well-known investor and entrepreneur on Wall Street, having launched one of the first index funds in the early seventies.
In the year As of December 2020, GMO had $65 billion in assets under management (AUM) and in recent years Grantham has been a vocal critic of the world’s economic missteps. Grantham During the ‘Great Recession’ of 2007-2010, he had a lot to say about Obama’s economics and statements about the housing bubble at the time. Speaking to the Reuters Global Markets Forum last week, Grantham said the S&P 500 stock market index could fall by 26% next year. During the discussion, he explained that he was betting against the Nasdaq Composite and junk bonds.
Grantham emphasized that the extremely high value of assets at the end of last year are called “super bubbles”. “The deterioration of fundamentals globally seems absolutely shocking,” Grantham said. A year from now, Grantham predicts the S&P 500 will post values of about 3,000 points and even be “reasonably lower.” Reuters reports that inflation is hitting Americans hard, and holiday sales in the U.S. are expected to be much lower this year.
In addition, global re-insurers are responsible for rising risk levels around the world due to inflation and the Ukraine-Russia war. Renowned investor Grantham says people often forget to factor in inflation.
“People forget to adjust the S&P for inflation … because of inflation last year, your assets are worth 9%,” said GMO’s chief wealth strategist. “This makes a marginal bear market an actual bear market,” Grantham added. Grantham joins Michael Barry and other Wall Street insiders who believe a stock market crash is coming.
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