Jeremy Grantham, co-founder of the fund management group GMO and renowned Wall Street bear, has warned that the recovery in share prices since mid-June is “eerily similar” to the rally seen in 1929-30 ahead of a major crash.
Grantham has called several busts correctly before.
In his new paper, Entering the superbubble’s final act, he argues that equities, bonds and property are all overvalued and that the economic outlook is “far grimmer” than could be foreseen at the start of the year.
He writes: “The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness. Each cycle is different and unique – but every historical parallel suggests that the worst is yet to come.”
