Tags: Jeremy Grantham | stock market | invest | economy

'Nervous' Grantham: Brace for Regular Bear Market but Not Big Crash - Just Yet

'Nervous' Grantham: Brace for Regular Bear Market but Not Big Crash - Just Yet
Jeremy Grantham

By    |   Saturday, 06 February 2016 01:00 PM


Famed investor Jeremy Grantham warns that while the U.S. stocks may be plunging into a bear market, recent volatility isn’t a harbinger of “the big” crash.

A landmark crash will eventually happen, but he doesn’t think we’re within striking distance of it right now, says Grantham, co-founder and chief investment officer at GMO.

He explains that the stock market will recover from its recent plunge and reinflate into a bubble — and then pop.

"Looking to 2016, we can agree that uncertainties are above average," Grantham wrote. "I must admit to feeling nervous for this year’s equity outlook in the U.S," Grantham writes.

"But I am not entirely convinced. Sure, we can have a regular bear market. That is always the case. But the BIG ONE? I doubt it," he wrote.

"But I think the global economy and the U.S. in particular will do better than the bears believe it will because they appear to underestimate the slow-burning but huge positive of much-reduced resource prices in the U.S. and the availability of capacity both in labor and machinery," he wrote.

“The ability of the market to hurt eager bears some more is probably not exhausted. I still believe that, with the help of the Fed and its allies, the U.S. market will rally once again to become a fully-fledged bubble before it breaks. That is, after all, the logical outcome of a Fed policy that stimulates and overestimates some more until, finally, some strut in the complicated economic structure snaps. Good luck in 2016.”

To be sure, Grantham isn't the only expert who is very pessimistic about the economy.

CNBC's Jim Cramer was blunt about his opinion of forever volatile stock indexes. “We are in a bear market,” the "Mad Money" host said on CNBC. But “I don't think there's a recession,” he explained.

A "bear" market is a 20 percent decline from the highs; a "correction" is a 10 percent drop.

However, all the recent economic data just doesn’t seem to please traders, or is enough to pull the market out of an extended funk. “Whatever number comes down is regarded as bad,” Cramer said.

(Newsmax wire services contributed to this report).

© 2021 Newsmax Finance. All rights reserved.


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Famed investor Jeremy Grantham warns that while the U.S. stocks may be plunging into a bear market, recent volatility isn’t a harbinger of “the big” crash.
Jeremy Grantham, stock market, invest, economy
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2016-00-06
Saturday, 06 February 2016 01:00 PM
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