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That's the sell side spin of course. They are hoping you read the headline and not the actual quarterly letter. Typical.
His estimate on overvaluation of the SP500 is 65%. Mine says it is closer to 100% overvalued. That being said I am not 100% in cash here. I like some EM stocks, some European stocks and a few high yield bonds, but nothing comprising the HY index.
If it goes up another 20-30% from here that's all well and good. If it halves from here I am good with that also.
Still ten years left to play the game. Another market cycle at least. There will be opportunities all along the way.
MarkM: I'm going to rethink my asset allocation and asset allocation plans/strategy in light of this article. And take a more serious look at John Hussman's articles. In the past I've not taken Hussman seriously, due to the poor performance of his mutual funds. But from this article, I see that Jeremy Grantham respects him a lot.
I'm reading Benjamin Graham's The Intelligent Investor now, so all of this has become more important to me.
In the more distant past, one had a very good alternative to stocks in higher interest rate FDIC Insured Certificates of Deposit in banks. Now there is very little. You can get 1% on a one year CD......
Whose writings do you respect other than those of Jeremy Grantham? I need to expand my horizons.
Well Charles just found one of them. I've been a fan of and correspondent with Meb Faber for years!
I like Andrew Smithers books Valuing Wall Street and Wall Street Revalued. His latest containing solutions to the constant bubble blowing is only fair.
Ed Easterling's work at Crestmont Research is outstanding.
If I were to subscribe to a newsletter you can't beat Jim Stack of InvestTech. Tremendous track record of compounding gains. Was too sanguine in 2007 though. (Most were). My belief is that most don't look enough at market history to realize what bear markets from overvalued conditions do to portfolios. Stack knows his numbers but doesn't like the timing game. He will get defensive though and was.
Hussman is a tremendous market historian. A good economist also. I suspect his personal bear market ends in a bit and he regains some of his lustre.
You are right. The alternatives to stocks are slim. In 2007-2009 I was hiding out in jumbo CDs from American Express Bank at close to 5.5%. That ship has sailed.
Good luck with your reading and investigations! Read both sides. A man has to decide for himself.
MarkM: Thanks. What is Jim Stack's performance record? I know the Hulbert Financial Digest tracks him closely, but I don't subscribe to that. What was Jim Stack's performance during bear markets, such as March 15, 2000-October 2002, or October 2007-March 9, 2009, and during bull markets, such as the past 5 years, and 1991-March 2000?
Are you in Meb Faber's ETF's? I just read his book, Global Value.
Comments
This is a remarkable article. Deserves attention, thoughtful analysis and discussion on MFO.
Barron's is nuts with respect to the title and subtitle they gave:
"GMO'S Jeremy Grantham Remains Bullish on Stocks"
"The famed investor says the S&P 500 can gain another 20% in coming years despite stretched valuations."
How about this instead:
GMO's Jeremy Grantham Remains Bearish on Stocks' Longer-Term Outlook
That's the sell side spin of course. They are hoping you read the headline and not the actual quarterly letter. Typical.
His estimate on overvaluation of the SP500 is 65%. Mine says it is closer to 100% overvalued. That being said I am not 100% in cash here. I like some EM stocks, some European stocks and a few high yield bonds, but nothing comprising the HY index.
If it goes up another 20-30% from here that's all well and good. If it halves from here I am good with that also.
Still ten years left to play the game. Another market cycle at least. There will be opportunities all along the way.
I'm reading Benjamin Graham's The Intelligent Investor now, so all of this has become more important to me.
In the more distant past, one had a very good alternative to stocks in higher interest rate FDIC Insured Certificates of Deposit in banks. Now there is very little. You can get 1% on a one year CD......
Whose writings do you respect other than those of Jeremy Grantham? I need to expand my horizons.
I like Andrew Smithers books Valuing Wall Street and Wall Street Revalued. His latest containing solutions to the constant bubble blowing is only fair.
Ed Easterling's work at Crestmont Research is outstanding.
If I were to subscribe to a newsletter you can't beat Jim Stack of InvestTech. Tremendous track record of compounding gains. Was too sanguine in 2007 though. (Most were). My belief is that most don't look enough at market history to realize what bear markets from overvalued conditions do to portfolios. Stack knows his numbers but doesn't like the timing game. He will get defensive though and was.
Hussman is a tremendous market historian. A good economist also. I suspect his personal bear market ends in a bit and he regains some of his lustre.
You are right. The alternatives to stocks are slim. In 2007-2009 I was hiding out in jumbo CDs from American Express Bank at close to 5.5%. That ship has sailed.
Good luck with your reading and investigations! Read both sides. A man has to decide for himself.
Are you in Meb Faber's ETF's? I just read his book, Global Value.