Jeremy Grantham Thinks Stocks Could Move Up Another 20-30%
Grantham states in his latest letter [see link below for full letter – available with free registration]:
“My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up.”
However, he believes this will lead to a devastating bear market:
“And then we will have the third in the series of serious market busts since 1999 and presumably Greenspan, Bernanke, Yellen, et al. will rest happy, for surely they must expect something like this outcome given their experience”
Grantham saves this warning for the prudent amongst us:
“In the meantime investors should be aware that the U.S. market is already badly overpriced – indeed, we believe it is priced to deliver negative real returns over seven years – and that most foreign markets having moved up rapidly this summer are also overpriced but less so. In our view, prudent investors should already be reducing their equity bets and their risk level in general.”
Back in May, in an interview with Charlie Rose, Grantham said equities in the U. S. were priced to generate zero returns in the future, but investors could expect positive returns from U. S. high quality and emerging market stocks [link].