Jeremy Grantham: "Let the Wild Rumpus Begin"

Value investor Jeremy Grantham (83 years old) has written a 4000 word article explaining his opinion that we're in the start of an epic drawdown, the fourth major bubble of his career.

TL;DR:

- we're seeing the same thing that that happened in the 1929 and 2000 crashes: (1) massive build-up unjustified by any fundamentals, like QQQ's 105% gain from the Covid low; (2) "crazy investor behavior" like dogecoin, NFTs and EV mania; (3) the most speculative/trendy stocks start failing, like meme stocks or ARK; (4) the selling moves to more reasonably valued blue-chips that are propping up a weak market.

- he anticipates the S&P 500 to decline by about 45%, to 2,500;

- he thinks bonds and commodities are also overpriced;

- he recommends avoiding US stocks in favor of foreign value stocks (particularly Japan or emerging markets); "some cash for flexibility, some resources for inflation protection, as well as a little gold and silver." But not crypto.

full article here, 10 pages:

https://www.gmo.com/globalassets/articles/viewpoints/2022/gmo_let-the-wild-rumpus-begin_1-22.pdf