Jeremy Grantham Interviewed on CNBC

By on November 12, 2010

Jeremy Grantham was interviewed a couple of days ago by Maria Bartiromo. Grantham commented extensively on the Fed’s market manipulations and their path of destruction. He mentioned they have enormous power to sway markets and will create another bubble and that all bubbles pop. Grantham said the Fed can stop bubbles, although they have said they can’t, since they indicate they don’t recognize them in the first place.

Grantham also talked up sensible fiscal stimulus that could end the suffering of workers whose skills are eroding the longer they are unemployed.

Grantham said the present situation is very dangerous with commodity prices being inflated by currency manipulation. His belief is that the world is running out of everything, which will become devastatingly clear in the near future. He thinks buying into companies which have “things in the ground” will pay off over time.

When questioned about the valuation of emerging markets, Grantham indicated they are reasonable, but a little overpriced, and the bull market could continue for a couple more years.

Grantham also spoke about the virtues of having cash on hand in case a crash occurs. He sees fair value of the S&P 500 at 900. If he was forced to buy stocks, he would concentrate on the blue chips like Coca Cola and a dose of emerging market equities.

When asked about the so-called fixed income bubble, Grantham said he didn’t believe it was a bubble by his standard definition. It was not created by “animal spirits,” but from investors being frightened by the financial crisis.

Grantham forecasts a decline in the dollar unless a currency war breaks out which he pointed out we haven’t had since the 1930’s. He feels the Fed’s QE policy is actually hurting the economy by lowering rates on retiree’s safe investments.

One Comment

  1. Mutual Funds

    November 15, 2010 at 9:57 am

    Hi
    Thanks For The Visit/Link& Information.
    Regards.
    Mutual Funds

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