GMO Chairman Jeremy Grantham is more upbeat than some of his fellow bears.
But he still expects things will get worse — much, much worse — before they get better.
Grantham estimates the current S&P 500 fair value at 900 but puts his worst-case bottom at a horrifying 450.
"That's fairly scary, but on the one hand we look at the massive stimulus, and then on the other we try to work out the fact that the global economy is in worse shape than it was in '74 or '82," Grantham told Fortune.
"I'd say there are three-to-one odds that we go to a material new low. We should count on hitting 600 for a little while, and we should hope like mad it doesn't get deep into the 500s."
Grantham is still a firm believer in buy-and-hold when stocks are trading below fair value, and he says his fund is slowly beginning to invest again.
"If you don't have a schedule for investing, you will not do it," he says.
"When the market goes down, it reinforces the hoarding of cash. By the bottom, you suffer what we called in 1974 ‘terminal paralysis’ —you cannot pull the trigger.”
“Almost everyone who avoids the great pain is very slow to get back."
U.S. stocks have fallen for three straight weeks and the S&P 500 is off to its worst start to a year with a 20 percent loss, Bloomberg reports.
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