Who’s Tired Of Jeremy Grantham?
Jeremy Grantham just wants to help. That's all.
He said as much in the very first paragraph of his latest apocalyptic missive penned, as usual, in a folksy cadence which, after all these years, is infinitely more annoying than it is disarming.
After regaling readers with yet another retelling of the American Raceways story (a formative tale of a 10-bagger from the late 60s), Grantham suggested he shoulders a heavy burden. And I don't mean the weight of his $1 billion personal fortune.
Grantha
This may not be a bubble and it may not collapse at any moment, but we have had a spectacular run (up) and reversion to the mean is a thing. Real yields are going up, and equity prices are likely to do the opposite until equity prices reach a new equilibrium.
“reversion to the mean is a thing”
Not really in this context. Reversion to trend is a thing, though. Which is what Grantham argues.
I stand corrected. Appreciate you.
Well put.
I hope the transition in markets continues as smoothly as presently. The word bubble is a bit abused at this point.
Maybe he’s another stopped clock?
Finally, somebody says it like it is. Grantham has not covered himself in glory. I wonder how GMO survives as an organization.
John Hussman is another doomsdayer. I love is monthly newsletter; the arguments are very clear and he has a lot of data to back it up. They are a joy to read for a nerd like me. But if you invested in his funds, you would have lost a lot of money.
“…if you invested in his funds, you would have lost a lot of money.”
That’s problematic
Fear sells, spectacularly when markets are a sea of red, which is, not coincidentally, when financial networks seek Jeremy’s timely counsel. We need a Grantham counter, a financial markets Geiger counter tuned to the frequency of Jeremy’s media appearances, so that we collectively know when it’s Get Me Out time.
Grantham’s record serves best as a contra-indicator. There is no need to even read the Bloomberg piece as they are just trotting him out, like a ‘usual suspect’, and dusting him off for the cameras. We all know the script. Financial-News niche actor. When QQQ crosses it’s 200dma the Journalism-AI scheduler automatically books Jeremy. Next it probably outlines/writes a few articles for Bloomberg.com and the scripts for the BloombergTV interviews. Wonder if J.G. shows up on “The Terminal”?
Then there’s James Grant, more of a class act, who at least makes me laugh if I’m in the mood for his brand of humor. Looks like he was torn from an old New Yorker cartoon. Mr. Grant is a bonafide author.
Netflix down 20% after hours on lower subscriber number. Is there room in the “rabbit hole” for Nuralagus (a.k.a., the Minorcan giant rabbit) if 2022 keeps this up? I’m still ticked off about the changes made to the VOX index that added Netflix, FB, etc.
He’s also late on this call. The segments of the equity market that were indeed truly bubbly have already declined substantially: SPAC’s, meme stocks, the pandemic darlings (PTON, ZOOM, etc), Cathie Wood’s innovation basket, and other profitless/long duration plays.
Good stuff, H! I wish more writers took note of your key points here.
I had never heard of Grantham until Mr H made fun of his Joker costume here. And I consume a lot of market reading everyday (I haven’t watched CNBC since 2000.) I guess, aside for here, I managed to avoid most of the carnival barkers. That said, Drunkenmuller cost me a bit in my hesitation to rejoin the 2020 market after I had a spectacularly profitable hedge the previous March. Thankfully, and finally, I’ve learned to ignore the voices and stick to the numbers.
The Joker costume is Gundlach. I don’t think Jeff is a charlatan. He just plays one on TV. He knows what he’s doing. He just likes the press associated with bearish calls.
This is a great article and frankly the reason I subscribe here. Perspective on markets that is pumped into the headlines needs to be vetted.
“Humans have a tendency to become caricatures of themselves in old age”
A little startled by this nsightful and eloquent observation, thank you for this H
Aging is the great equalizer for all humans … we desperately hope to remain relevant, though often forget or refuse to accept that in order to do so, we must continue to interact, progress, and evolve within the world we remain alive in…GLTA…
Amen, Mr. H!
I belive that today’s price is tomorrow’s headline. Rarely is it the other way. What is my time horizon?, Do I use leverage? How do I decide I’m wrong? Part of this is personality, don’t you think?
When I got on the trading desk every morning, I would say to myself The quest for logic continues…….
Interesting to revisit this in light of recent market developments. Was he a broken clock that happened to be right as it is “that time of the day”, or a prophet? He should get some credit for calling the bubble I guess, even if he was a tad early.
I too am curious given the debate and rigor from this site.
To be fair Grantham’s statements (ignoring made up terms like “superbubble”) on the surface are wise…
https://archive.ph/NTW5L (non paywalled)
But in the details wrong and Mr H’s assertion is materially correct: crying wolf and getting bit by a shark are not the same.
The asset high for the S&P500 was Dec 31st 2021, and the market’s decline (and indeed commodity inflation pressure) really occurred after Russia’s invasion of Ukraine in February, then a second drop after the Fed Missed Inflation in April.
So Grantham’s comparisons to 1929, 1969, or the GFC are disingenuous at best; cynically the commonality is the emotion and hype of a crash.
Grantham’s assertion of a 2022 housing bubble still hasn’t been borne out. Case-Shiller’s still not plateau’d (US housing shortage is real and exacerbated by Covid19) and following the Inflation narrative/logic then RealEstate is actually a preferred asset.
Unfortunately Grantham’s railing against the Fed didn’t come with actual instructions for them to immediately start rate hikes and QT, otherwise he’d have been more believable.
His financial advice is fairly scattershot:
“A summary might be to avoid U.S. equities and emphasize the value stocks of emerging markets and several cheaper developed countries, most notably Japan. Speaking personally, I also like some cash for flexibility, some resources for inflation protection, as well as a little gold and silver”
His “avoid this” S&P500 is currently at -11% from Jan 21st, not a “3 sigma” loss
VEMAX is -15% , I’m not sure if Grantham’s EM would include Russia?
HEWJ is about neutral – so if inflation’s at 10% not a great hedge
Cash would have been solid, too bad it’s “some cash” mixed with a lot of other poor recommendations
Unsure which “resources” he means, if he’d called Oil or pushed TIPS he’d be historically more credible
IAU is down about .5% (so almost neutral)
But don’t believe me, you could have invested in the following…
GMOM is about even
GEMEX is -25%
GEACX is -10%
And all of that “it’s crashing” is predicated on knowing when to “get back in”, the penultime point Mr H makes (and Grantham did not answer).