Make Stocks Collapse Again

Make Stocks Collapse Again

Will anyone hold Jeremy Grantham's feet to the proverbial fire if his latest dire prediction doesn't pan out? Spoiler alert: No. But, he will be celebrated if he's even half-right. And that's the nice thing about being a "brand name" in this industry. When you're right, it's evidence of the kind of superhuman acumen that made you wealthy in the first place. When you're wrong (which, let's face it, is most of the time), nobody remembers or, better still, markets get the blame for being "irratio
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11 thoughts on “Make Stocks Collapse Again

  1. I mean the “generates no income” aspect would also invalidate fine art. That’s probably a more interesting angle than gold or bitcoin. I’ve actually seen ETF’s for fine art now as a product. Is buying fine art investing? It carries historical precedent like gold and land. It’s harder to argue buying a Monet is just greater fool at play.

    1. It’s harder to argue buying a Monet is just greater fool at play…

      Not really… 🙂 It’s truly not quantifiable ergo only a fool would pay anything for it.

      It’s just there is always been such a fool and likely will always be, as long as 1- people have eyes to see and 2- wealth concentration at the top continues.

  2. Well, after this stimulus runs out, we continue to have the government overriding signed contracts among individuals/institutions and allowing non-payments of student debt and rent through (at least) September.
    If and when it looks like those will ever be required to be repaid, I might trim my “long”.

    1. Maybe part of a new concept of democratic capitalism is to have universal market ownership akin to universal healthcare. Biden has been talking some kind of government payout for every newborn. Should/could this be structured as a market investment so to give everyone some ownership. Done right it could help address the extreme unequal distribution of wealth as currently exists. It also could help unify national economic focus with everyone having skin in the game.

  3. H rightly points out- that nobody really knows where the market is going consistently. It is that simple. Of course some have more correct calls than others.

    1. “Of course some have more correct calls than others.”

      As it happens, just half will have more and half will have fewer correct calls. No one brags to much about having fewer, however.

  4. I am trying to think of a scenario under which the Fed would either not step in or if they did – to no effect.
    Been stepping in since 1940’s, each time more aggressively than the previous time.
    Hardly seems like the USA is at the end of our rope.

  5. If one believes in ‘the market is always right’ or some variation, however weak, of the efficient market hypothesis, then I think they are forced by logic to admit that everything we have seen since last April or so was known ‘at that point’. A minimum 2-year pandemic was known, as well as its attendant characteristics. The global government response, directionally, was known, including the unprecedented moves toward nationalization. Waves of layoffs and insolvencies were known. I read the phrase “look through” about 1,000 times last year in the financial world. Other than the binary moves in the decision tree (vaccine vs. no vaccine) and (stability vs. instability in US political transition), nothing much has really changed in an epistemological sense since early November. In other words, why now? Other than some explanation based in ‘pure psychology’, what has changed?

    Now if one doesn’t believe in any version of the efficient markets hypothesis, then they can say, consistently, that something is ‘on the verge of collapse’, a ‘bubble’ or a ‘mania’, based on whatever independent framework they believe in and use. They would be validated right or wrong only with a great deal of hindsight, which in essence would be a validation or repudiation of their independent theoretical framework. Whereas anyone who is even a little ‘relativist’, from the paragraph above, does not mean the same thing when they use the word “bubble”. Both sides fight over the word, but are really speaking distinct languages. I don’t know If Grantham falls in the latter group or in the former.

  6. The ever increasing number of assertive statements by experts and media commentators alike that we are in the mist of a 1999 style bubble about to blow the markets into oblivion gives me serious doubts it will happen any time soon. It is basically consensus now to attribute the recent market moves to manias, exuberance and speculation. I know there are signs of speculation and irrational behavior, I watch the tape daily, but I have a hard time concluding that additional fiscal relief will inevitably lead to a market meltdown of epic proportions. Can we see further retail call buying of Tesla and others? More Spacs? Sure. We most certainly will experience a market correction even without further stimulus or speculative behavior, but an 80% decline with rates pinned at zero, volatility subdued and Central Banks committed to intervene seems unlikely, not impossible, but simply less plausible than what we have seen recently, sharp corrections that investors and algos buy aggressively.

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