Jeremy Grantham crash call
I don’t mean to pick on Jeremy Grantham, I just seem to see his stuff come across more than others. Maybe that is because he is so influential, or maybe he just generates headlines that financial journalists love like calling crashes and calling things super bubbles. What is he saying this time?
Jeremy Grantham Calls Bubble Popping and Stock Market Crash Again…
So, Grantham is back with another stock market crash call, or he is still calling a stock market crash that already started, or he is really super serious about it this time, depending upon how you want to spin it.
Grantham spins it like this:
“I wasn’t quite as certain about this bubble a year ago as I had been about the tech bubble of 2000, or as I had been in Japan, or as I had been in the housing bubble of 2007.”
Bloomberg
That’s weird. I don’t remember any “I’m not as sure,” talk the last time Grantham called a bubble popping stock market crash. I wrote about Grantham accuracy right here in March of 2019 when he was already calling a crash (oops). I wrote about him again in January of 2021 when Grantham called an “epic bubble”. This latest interview he claims a super bubble and the market crashing.
In a note posted Thursday, Grantham, the co-founder of Boston asset manager GMO, describes U.S. stocks as being in a “super bubble,” only the fourth of the past century.
Jeremy Grantham Doubles Down on Crash Call, Says Selloff Has Started (yahoo.com)
I mean, eventually the guy is going to be right. The stock market moves in cycles, and yes, there will be a correction, recession, or crash sometime in the future, and maybe soon, but you can hardly give someone credit for “calling it” when they were calling it for two or three years. In fact, if you listened to Grantham at the beginning of 2021, you would have lost a lot of money compared to staying invested. And, if you listened to him in 2019, then you would have lost even more.
Grantham, though, in addition to being a wealthy stock picker knows how to work the media. You see, according to him, the market collapse he predicted last year has already started (despite being way up from last year) and that there will eventually be a 50% plunge in the markets. Oh, and this time, he really is as sure as he had been the other times when he was “right.” So, if he is finally right — after being wrong for at least two years — everyone should go around crediting him with “calling” the crash of 2022…
Unless it takes until 2023.
While Grantham Was Wrong
If you were wondering how the markets did starting with Grantham’s first The Market Is Going to Crash story, it isn’t pretty. If you had heeded Grantham’s call and pulled out of the market, or even cut back, you lost out on a whole lot of upside.
S&P 500 Annual Return
- 2019 up 31.5%
- 2020 up 18.4%
- 2021 up 26.9%
That is a whole lot of wrong, and a whole lot of money lost while waiting for Grantham to be “right.”
Who knows? Maybe this is the year the markets roll over. Maybe there will be a big crash. It might be a nice sideways trend, or a less sinister correction too. I don’t know about you, but I wouldn’t give him credit for calling it, or being right.
About the Author
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. At the time of publication, Mr. Nelson did not own any securities mentioned above, however, that may change at any time without notice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.