Waiting for the Last Dance
Jeremy Grantham · 2021
"US equities are in a full-blown epic bubble that will end badly, comparable to 1929 and 2000."
In 2021, legendary investor Jeremy Grantham warned that the US stock market was in a massive, multi-asset 'superbubble' driven by zero interest rates and speculative mania. He correctly predicted the painful popping of this bubble in 2022.
Grantham identified the classic hallmarks of a late-stage bubble: extreme overvaluation, explosive price increases in the final months, and a speculative frenzy in low-quality assets (SPACs, meme stocks, crypto). These bubbles occur when nearly perfect economic conditions are extrapolated to infinity. When the underlying regime changes (in this case, rising inflation forcing central banks to hike rates), the discount rate rises, and the illusion of infinite growth shatters.
According to Grantham, what psychological indicator signals the final stage of a superbubble?
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The explanation above is written with AI assistance. These are the originals — go to them to check it.
- Secondary write-up on Grantham's memoMarcellus
Buy American. I Am.
"Amid GFC panic, US stocks are cheap; be greedy when others are fearful."