Stocks are off to a rough start this year. The tech-heavy NASDAQ is already in a correction, a more than 10% drop. And if one the most influential hedge fund managers is to be believed, this could be only the beginning of a very painful time for investors.
Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (GMO) said in a report called “Let the Wild Rumpus Begin” that stocks are now in the midst of a “superbubble,” that it won’t end well.
Grantham, who has been running the firm’s investments since it was started in 1977, was similarly bearish at market tops in 2000, and during the Great Financial Crisis of 2008. He noted that US stocks have experienced two such “superbubbles” before: 1929, a market fall that led to the Great Depression, and again in 2000, when the dot-com bubble burst. He also said the US housing market was a “superbubble” in 2006 and that the 1989 Japanese stock and housing markets were both “superbubbles.”