- Jeremy Grantham issued a grim warning about a "superbubble" in markets this week.
- The GMO cofounder said the unprecedented boom in asset prices is nearing a conclusion.
Jeremy Grantham warned of an unprecedented "superbubble" in asset prices, and predicted it was about to enter its final and most devastating phase, in a research paper published Wednesday.
The veteran investor and GMO cofounder explained why it's critical for investors to carefully navigate the impending crash, and detailed what makes this bubble far more dangerous than previous ones.
Here are Grantham's 7 best quotes, lightly edited for length and clarity:
1. "Only a few market events in an investor's career really matter, and among the most important of all are superbubbles."
2. "These times of euphoria and panic are the most important for portfolios, and the most dangerous for careers."
3. "These superbubbles have always — in developed equity markets — broken back to trend. The higher they go, therefore, the further they have to fall."
4. "All three major asset classes — housing, stocks, and bonds — were critically historically overvalued at the end of last year. Now we are seeing an inflation surge and rate shock as in the early 1970s as well. And to make matters worse, we have a commodity and energy surge (as painfully seen in 1972 and in 2007) and these commodity shocks have always cast a long growth-suppressing shadow. (Grantham was explaining why he sees an unprecedented mix of dangerous factors in the current bubble.)
5. "Between COVID in China, war in Europe, food and energy crises, record fiscal tightening, and more, the outlook is far grimmer than could have been foreseen in January. Longer term, a broad and permanent food and resource shortage is threatening, all made worse by accelerating climate damage."
6. "These few epic events seem to act according to their very own rules, in their own play, which has apparently just paused between the third and final act. If history repeats, the play will once again be a Tragedy. We must hope this time for a minor one."
7. "Each cycle is different and unique — but every historical parallel suggests that the worst is yet to come."