Legendary British investor Jeremy Grantham is predicting hard times ahead, as he lays out his case for doom and gloom to cast a shadow on the markets.
In Grantham’s view, the pandemic stock gains were a bubble, and that bubble hasn’t fully popped yet.
Putting some numbers to this view, Grantham believes that a further drop of 20% is possible this year – and in his worst-case scenario, he says that the
S&P 500 could collapse as much as 50% from current levels.
Backing his view, Grantham says of that worst case, “Even the direst case of a 50% decline from here would leave us at just under 2,000 on the S&P. Doubling down on the gloom in an interview taped for an upcoming episode of Bloomberg Wealth with David Rubenstein, Grantham said the Federal Reserve’s most aggressive tightening in four decades could tip the economy into recession and take the stock market with it.
“In the end, life is simple. Low rates push up asset prices. Higher rates push asset prices down,” he told Rubenstein. “We’re now in an era that will average higher rates than we had for the last 10 years.”
Grantham, 84, is well known for bearish forecasts that have occasionally been issued before big market shocks, such as in 2000 and 2008.
He called the post-pandemic surge in equities “in many ways about equal to the 2000 tech bubble”
but said its deflation has been delayed by the frenzy surrounding artificial intelligence. NN: Regard this as your marching orders. Grantham is one of the very very few people in this business who understands how markets works. We are about to have a BIG market crash that will exceed the 2000 Tech wreck, AI is a scam…… These valuations are the biggest bubbles i have ever seen. Trade reco is coming