Jeremy Grantham

The US stock market bubble of 2020 will burst within about two years (by early 2023), with damaging effects on the economy and portfolios.

“But this bubble will burst in due time, no matter how hard the Fed tries to support it, with consequent damaging effects on the economy and on portfolios.”

Said on

5 January 2021 · GMO Viewpoints essay "Waiting for the Last Dance"

Source

Waiting for the Last Dance · GMO

Should come true

by 2023

How sure they sounded

will burst in due time; It will very probably end badly

Categories

MarketsEconomy

Importance

4 of 5 · A burst of a US equity bubble of 1929/2000 scale would destroy trillions in wealth globally.

Outcome

Partly right Happened 12 October 2022.

Inferred window ~2 years ("in due time"). Speculative stocks collapsed from Feb 2021 and the S&P 500 fell about 25% (Nasdaq about 35%) from Jan to Oct 2022, but this was well short of a 2000/1929-style burst, the US avoided recession, and the S&P regained its highs by early 2024; scored partial.

Evidence:

• https://en.wikipedia.org/wiki/2022_stock_market_decline
• https://www.nber.org/research/business-cycle-dating