Jeremy Grantham, the veteran investor who cofounded GMO asset management, often feels like Crocodile Dundee.
In the eponymous 1986 film, Dundee, an Australian bush dweller, visits New York City. In what is perhaps the most famous scene, a thief pulls a knife on Dundee and demands his wallet. His acquaintance urges him to comply, reasoning that the thief is holding a deadly weapon.
But Dundee doesn’t view the knife as impressive. “That’s not a knife,” Dundee says of the thief’s weapon, smiling and pulling out a much-larger blade. “That’s a knife.”
While Grantham, a suit-wearing investment strategist, isn’t scaring off thieves with machetes, he’s not impressed with the type of rally the market has seen since October 2022 after its peak in January last year.
In January 2022, Grantham published a note titled “Let the Wild Rumpus Begin,” in which he said a bubble in the S&P 500 was due to unwind spectacularly. Since then, the index has been just about flat. But he’s standing by that call, as he’s seen bigger rallies unfold after calling a bubble. Take 1998, for example, when he warned of the dot-com bubble. Despite being at record valuations, the S&P 500 rose another 50% after his…
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