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Jeremy Grantham Goes Bearish: "Now Is The Time To Fight The Fed" And "Stocks Trading 40% Above Fair Value Are Badly Overpriced"
Just released from Jeremy Grantham, who has gone, for all intents and purposes, "balls to wall" bearish.
"I do not feel the same degree of confidence that I did, which was considerable, that the Fed could carry all before it until October 1 of this year. A third round of quantitative easing would very probably keep the speculative game going. But without a QE3, there seem to be too many unexpected (indeed unexpectable) special factors weighing against risk-taking in these overpriced times. I had recommended taking a little more risk than was justified by value alone in honor of Year 3, QE2, and the Fed in general. Risk now should be more reflective of an investment world that has stocks selling at 40% over fair value (about 920 on the S&P 500) and fixed income, manipulated by the Fed, also badly overpriced. Although the taking of some “extra” risk by riding the Fed’s coattails has been profitable for six months, I admit to being a bit disappointed: I really felt the market had the Fed’s wind in its sails and would move up deep into the 1400 to 1600 range by October 1, where it would be, once again, over a 2-sigma 1-in-44-year event, or, officially, a bubble. (At least in a world where GMO is the official.) At such a level, I was ready to be a real hero and absolutely batten down the hatches, become extremely conservative, and be prepared to tough out any further market advance (which, with my record, would be highly likely!). The market may still get to, say, 1500 before October, but I doubt it, especially without a QE3, although the chance of going up a little more by October 1 is probably still better than even. And whether it will reach 1500 or not, the environment has simply become too risky to justify prudent investors hanging around, hoping to get lucky. So now is not the time to float along with the Fed, but to fight it. Investors should take a hard-nosed value approach, which at GMO means having substantial cash reserves around a base of high quality blue chips and emerging market equities, both of which have semi-respectable real imputed returns of over 4% real on our 7-year forecast. The GMO position has also taken a few more percentage points of equity risk off the table."
Full must read letter (pdf):
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Welcome to the Party Pal!
And York's Dinan is raving about how cheap the market is! Guy, you lost 40% in 2008. We're done here.
Market is cheap, well as long as you dont mind paying for 100 P/E all time highs based upon nothing but support from smoke-billowing printing machines.
Exactly.
Now, there are cheap stocks with solid fundamentals out there, but the market is not cheap, broadly speaking.
I think he said the market is trading at 13x. It always fun when you make up numbers. 13x? Really?
(Filthy rich) moron doesn't have the best track record at recognizing an expensive market:
http://www.scribd.com/doc/11805745/York-Capitals-Letter-to-Investors
You'll see soon enough how "cheap" the market is right now. Then just wait for Benny Lightyear to crank it up again when the end of QE2 takes the floor out of it....
Enter RoboTrader:
"This guy is going to get smoked"...blah blah blah
Well, at least we figured out that Robo is a bottom. He's right under you. :)
Poor Jeremy Grantham hasn't been out in the real world.
Retail sales are exploding, as evidenced by the 9% move in Macy's today.
Markets don't top out when retail stocks are still making new 52-week highs.
Retail stocks usually start rolling over 3 - 6 months before the broad market tops out.
And just this month, Transports have been pinned at lifetime highs.
A note about M....it was widely known that this trade was juiced by the expectation that a share buyback would be announced. Instead, a dividend was announced.
My guess is that the trade on M will come unwound by Friday...at the latest.
RainbowTrader hardly cares about all that, he just glances at whatever happens to have popped up this morning, presents it as his long standing trade, and tries to bask in the sunshine of it. Pathetic. By Friday when the false spike is removed plus some more it will be forgotten and he'll be talking about some other assless jeans stock or $9 burrito momo POS.
+1,000 - he certainly doesn't own any of the junk he posts charts of. I'm sure I can find a gold stock up today...doesn't mean shit.
Oh really? What happened last spring? Oh, RTH topped out at EXACTLY THE SAME TIME as SPY.
To
The
Day
Your thesis just sucks.
Housing is just booming. Sales are at record highs. Americans are loading up their credit cards. Economy is just great. LOL
LOL, RainbowTrader continues his pathetic 'Gee, look at stocks go up, I conclude it has to be wild retail sales and not obvious FED manipulation from billions thrown in daily'....who do you think youre fooling here clown?
Why do you think ZH gives RainbowTrader special privileges? Could it be that RainbowTrader is a ZH insider that functions to stir the pot? Look at the stupid things RainbowTrader says. He/she must be a plant to stir the pot...
My theory has been Robo is Tylers loser unemployed brother in law and he throws Robo a few bones per post, threw in posting privileges as well to give 'status'.
Booyah!!!
Agreed RobotTrader and wow, yet another clarion call for revolution ("now is the time to fight the fed") from someone remotely tapping a keyboard . . .
ZH is a sophisticated online poker message board. The game is the whole thing. These impassioned pleas for revolt are hollow and just reveal who can hold their water and who cannot.
That said, I can barely hold my nose and go long anything but PMs at this point.
You're certainly right about treating it like a game. This is why ZH's whining about corruption rings so hollow.
The stark relationship between the semi-affluent mini-me sharks here jockeying for a financial position in the endless quest to consolidate capital and the eeevil banksters couldn't be more apparent.
Once upon a time on ZH, it might have made sense for me to attempt to have a constructive conversation what trading MBS looks from the inside, or the philosophical relationship between Mill and Rothbard, or how Chandler's "Visible Hand" has changed in interpretation over time and reflected itself in real world economics, or insider accounts of gold mining developments in Alaska...but time has been ZH's enemy. Now it is quite clear that the site was destined to become a cesspool of greedy, bitter ignorance and bigotry.
The only purpose of my visit is to applaud your losses now. Every time members of this community complain about getting hoodwinked by the market they hate - but cannot get enough of - I admit, I get a bit of a chuckle. Enjoy.
Your smugness is off the target. Because of this site I bought 2000 ounces of physical silver at an average price of exactly $00.00. This was accomplished because I bought as much paper as physical silver at an average of 19.71, and sold the paper for 44.17, again because of warnings found on this site. I thus covered the taxes and the cost of the physical. So I'm not sure I understand how your going to applaud my losses because I can only lose if the price goes negative. I'm sure a pompous ass like you can figure out a way to rationalize my position into a loss, though. I can't wait to hear it. I'll get a bit of a chuckle.
Here's some more fuel for laughs:
A) You've just validated my point on compulsive wealth consolidation. Good job. Now why don't you explain how what you are doing is more constructive than the big corporate bad guys? You want a cookie because you're taking value out of the system for your own benefit? I invite you to put up or shut and brag about how much silver you have in your house the next time you visit a big box store, a restaurant, or any where else where people are just scraping by in this "new normal" economy. Make sure to really rub it in. Maybe your house will be the next place to get "swarmed" like that convenience store in Vegas. You may have the guns, but they have the numbers.
B) Yeah. I'm totally going to take your alleged "profit" at face value. Talk is cheap. Got any other unsubstantiated anecdotes to crow about, internet tough guy?
C) Isn't it funny how everyone who disagrees with your ethos is pompous or smug? In a world where everyone else is wrong but you - perhaps we should apply Occam's razor and come to the conclusion that you're the problem. How's that for rationalization?
Your smugness is measurable from the content of your posts, you scumbag. It has nothing to do with whether you agree with me or not.
Moreover, you attack people here because you claim they are losing money, then in the face of a counterfactual, deny that was your intent.
In addition, you claim to only visit here to watch people lose, but then watch your posts for an extended period to see if there are replies.
Go fuck yourself, troll.
Reading a little deeply there. Your logic is all over the place. It only deepens questions about the credibility of your first response. I think your lack of rationality also belies your capacity to understand criticism. Also, since this whole board is comprised of trolls, your witless comeback sounds whiny.
Your lack of rationality speaks for itself.
Your lack of rationality speaks for itself. Troll.
Your lack of rationality speaks for itself. Troll.
I wouldn't bet against Grantham, he has an almost perfect record of predicting bubbles, and he said he hates gold as an investment.
Ok, so one is bearish and the rest of the market bullish. I'm so glad I closed my trading accounts years ago and started to invest locally. My returns have been much better and my loses have been next to nothing in comparison to the amount I have out.
DaddyO
'40% above fair value' is giving a WIDE margin to the real overvaluation of many of these ridiculous FED pumper stocks. 70% overvalued minimum real world conditions.
here comes 1.4250 eur
Fucking pussy, if he wants to make real money he will go short soon, right when the money printing stops. That's my plan, worked last spring, will work again, guaranteed.
Though I too am disappointed the market hasn't gone higher - I was thinking 1500 by June, giving me a higher entry point.
is this a head fade? so that the FED will leave Silver and Gold alone?
Look! all my fellow "Fight Club Brothers"!
DO!
NOT!!
FIGHT!!!
the Fed.
DO!
NOT!!
SHORT!!!
anything in the markets... becuase you will get pwnd.
FED central banksters are about out of dupes to pwn. Only ones left now are the 401K pension Bathrobe Brigades who will one of these mornings awake to find the Treasury has taken them over, and 'off limits' to access. Now THAT will be a funny morning, I cant wait for it!
Remember a yr or two ago a proxy was floating the idea of letting people convert their 401k's into "secure" govt accounts? They, out of the goodness of their hearts, even offered to replace some of the losses you incurred in the cruel market! It's gonna happen.
Synthetic Tops in Commodities Provided by the CFTC to the detriment of Americans and Betterment of “People’s Republic of China”!
Every time the CFTC releases its Margin Hike Press Release after hours here in the United States.. China gets to front run the Fucking Dip!
It is not bad enough that the idiots who back test blindly will cause artificial drag on the market with the Synthetic Peaks that have been provided to them, the algo’s can NOT even grasp the concept and for the most part the people who are programming are going to favor the numerically correct solution based on the larger law of averages..
But an American Commission, that is supposed to protect Americans.. is empowering China to once again have the upper hand?
What the FUCK?
Our Government has given China enough freebies for the week! And last week and pretty much going forward for-fucking-ever!
I hate stupid people! I hate the stupid Government that allows 50,000 jobs to go to China a MONTH! Now China gets to front run the downward pressure in Metals which benefits CHINA! Which is a foreign Power! More than the Americans it is supposed to help in the long run!!
TREASON! IS FUCKING TREASON!!
Senate Republicans blocked a Democratic Bill to End tax Breaks for Moving U.S. Jobs Offshore! 50,000 Manufacturing Jobs a Month since 2001 have LEFT! The United States for China! http://goo.gl/6qhnK
How much more are we going to have to give China? When is enough stupidity enough? This Country is FUCKED! And no one gives a shit! Everyone wants to pray for the rapture or live the lie of the Treasury! And where in the FUCK are the people charged with securing the national Security of the Country? Those mother fuckers are the First ones that should be hung for treason.. going back 30 – 40 years!
Right now, retailers, airlines, hotels, and cruise lines are celebrating the collapse in energy prices.
The Bernank has licked inflation once again, using paper.
$102 crude to you is a 'collapsed energy price'? Youre retarded, and your 'Duh gee guys look at the stocks GO!' act is now just sad.
Since you mentioned crude, can someone tell me why fuel prices have risen twenty cents over the last three weeks, while crude tumbled nine percent?
You can't refine FED paper into gasoline. Paper Silver can't be used in electrical and electronics. Both are in the process of decoupling from physical markets.
Retail gasoline price always lags. Look at any c-store's gas margins -- they get squeezed when prices are rising and widen out when prices fall. But over the medium term, they average 12+/- cents per gallon.
How can someone printing billion...sorry, trillions of dollars be "licking inflation"? He is the inflator, all he does is inflate the money supply. Oh, commodity X dropped Y%? So? the trillions are still there, waiting for the next thing to buy....
Spit Bernanke's balls out. I can hardly understand you.
People should go back and read his "Turning of the Worms" Letter prior to the shit hitting the fan in 2008.
We are fucked, and the sooner the reset button is pressed, the better off we will be under Global Monetary System II.
Somewhere out there is a hedgefund manager(s) shitting his pants right about now.
Gee, I've felt that way for YEARS!
Please, who coined the term "lost decade" to describe the stock market from 2000 till 2010? If it was lost for a decade Jeremy ,then when will it ever be "found". I'll tell you when. When Jeremy and those like him capitulate.
Jeremy, what's the DJIN worth priced in gold, silver or 2000 dollars?
Meanwhile spot silver plunging toward $35 but you still can't get physical for less than $44-45/oz.
Big money is probably unloading physical and buying paper futures.
Well you're the only one. I find it everywhere between $1 - $2 over spot (which is normal)
please tell me where. Apmex is $44 is small qtys
1 0z .999 pure silver:
$39.43 > little over $2 over spot
http://www.apmex.com/Product/23/1_oz_Silver_Round___Mint_Varies___999_Fine_.aspx
$1.89 for 100oz bars:
http://www.apmex.com/Product/20/100_oz_Engelhard_or_Johnson_Matthey_Silver_Bar_999_Fine.aspx
don't confuse pumpers like cliff mosely claven with facts
http://www.bulliondirect.com/catalog/selectProducts.do?cat=Bullion_Silver&category=1
Good site as well.
This mythical price disconnect is a phenomena that only occurs when silver falls in price. I think it's a psychological defense mechanism for uber bulls
Bullion Direct...that's where my brother buys all his stuff....says it's good and the owners there are straight.
Kitco has silver eagles for $80, Kukaberas for $41.
That sucks. Here in Sweden prices are about the same but we at least have 25% sales tax to blame. Man, I wish I was an American PM retailer. They seem to making heaps of cash...
Todays' downward blip in the market is simply Bansters voting "NO" to one of their own being thrown in jail...
By 2:00 PM Eastern they will have mourned enough and return to market pumping...
XRT still pinned at the highs, still over $53
Market down over 100 points and the retail sector is a refuge of safety.
LOL....
Does ZH compensate you per post and per every reply you generate?
I believe he's Tylers loser unemployed brother in law, and his sister harassed Tyler into giving him special chart posting priv's along with a few bones thrown his way per post. I can think of no other logical reason for this chowderheads chart posting abilities and obvious shit stirring inane posts.
<<< I believe he's Tylers loser unemployed brother in law >>>
a la Mike Teutul from 'American Chopper'. He was a dufus, but his dad gave him a job for a number of years.
I figure RainbowTrader has some special relationship to ZH. I can't imagine they employ him/her because of the actual value of his/her posts. I think RainbowTrader is here to stir the pot and generate activity (i.e. sticky eyeballs).
EXACTLY lol 'Mikey' = Robo.
Smoke and Mirrors. Shut down the market and f Whore Street and the Govt.
So much for US-China collusion and the dollar:
http://www.activistpost.com/2011/05/us-in-new-push-to-break-china-intern...
There's blood on that thar Wall Street today! Fight the Fed. Declare war on the Fed!
Wow, silver is getting destroyed. But don't worry. It will be $150 this year. At least that is what I was told.
As Bair nears retirement, she warns about another " break-the-buck " incident with the MMFs. They'll go after our fiat too. Time to stash under the mattress.
http://www.bloomberg.com/news/2011-05-11/fdic-s-bair-says-u-s-money-funds-destabilizing-to-markets-at-sec-forum.html
Ghostface - any thoughts on the AG's floating out a settlement? I know you follow the mortgage game quite closely.
thx!
I agree with the TD analysis from yesterday.....a farce.
http://www.zerohedge.com/article/banks-offer-paltry-5-billion-exchange-full-expungement-robogate-charges-and-complete-release
Oh the volumes I could write about the mortgage market.
It's pretty clear nothing will happen to the big banks, at least nothing of any substance. It is obvious, at least to me, that Geithner is going to do everything in his power to pursue a mortgage market dominated by the big banks - the GSE reform paper, the QRM rules, broker compensation - all designed to consolidate the mortgage market into the hands of the big 4 mortgage banks plus a few hangers-on like GMAC.
I'd really hate to be a mortgage broker right now, or a small mortgage bank, the govt has you clearly in their sites.
And just as I was getting ready to short treasuries!
There a change in the wind! This kind of stock sell-off would never have occurred at the peak of QE2.
That was the same thought I had, so you might want to do a retake on that!
lol
It's soo damn hard to step in front of the freight train. Your timing has to be impeccable. It's better not to play their game. I could see the mkt going up 50% as easily as dropping 50%. How does one play that one?
I bet we'll probably see both coming true.
http://en.wikipedia.org/wiki/Straddle
Send me a link to long term low cost straddles. Even stripper straddles are short term and high cost ;)
Nice ;)
If he's right, we're looking at blood orgy coming in the markets. All we need is one major piece of news that we are heading back into double dip and this blood letting will price in the end of QE2 with a massive correction.
It will also be an excellent time to buy PMs, for what's coming next.
Yeah, IF.
Posted Feb 16, 2011:
When DOW/S&P500 correction gathers momentum, I expect:
UP ~ USD, various USDXXX currencies, VIX Index
DOWN ~ EURUSD, AUDUSD, NZDUSD, GOLD/SILVER, Base metals like COPPER etc, CRUDE OIL.
http://stockmarket618.wordpress.com
What most members of the financial punditocracy don't get is that we are in a new paradigm wherein the action of commodities, bonds, stocks, currencies, and other financial paraphernalia are almost completely unmoored from the underlying.
What they don't get is that financial prices are now a global Virtual Game, a video gambling site.
As we move thru time, the markets have been taking on, evermore, a life of their own.
If we have billions of speculators or hundreds of millions of us that have immediate gratification needs that can be satisfied by pushing the "enter" button after fashioning a trade using either very sophisticated trading tools and software, inside information, or the flip of a coin then the comments of financial pundits are just a little less useless than mammaries on a non-transgendered Chaz Bono.
It's a new world now, much different than the last time, and since the entire trading market is now democratized, robotof(r)ied, and a mishmash-pastiche of so many varying peoples with all their emotions, intelligence, and pioneering spirits active 366/24/7, fueled by any number of anti-depressants, laxatives, ADSD drugs, alcohol, purple haze and her sisters, and psilocybin, we can safely say that the only price that is worth anything, is what the bid is right this millisecond. Nothing else matters and you can't predict tomorrow's price at all.
And act fast because that bid can change in a millisecond by someone, perhaps an aging monk in a little tailor shop in an eensy Tibetan mountain town, in zen mode.
Interesting post, anony. Trading on/off since 1976 I agree about the video gambling aspect of mkts today. If it weren't for a gold bet from $320 I'd be underwater, as my old tapereading trading techniques are getting less and less traction. Been net short equities for over a month (ouch), but won't let go of this bone. Grrrr. GL.
g
When you get a single cycle turning bearish, they can be overcome by other bullish cycles, (ie intermarket analysis). But when you have three important cycles turn bearish, game on.. cycle conur with Jeremy..see here
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=205_cycles-say-the-bears-are-about-to-roar-2011-05
Tyler Durden, the singlest best "person" to grace the financial web in the history of earth.
Without a doubt, my pick for "TIME Person of the Year" for 2011.
+1
Long term fan of the site, first time poster. Is dollar the only theme now? Every asset class is rising and falling in lock step now. What happened to lower oil = NFLX at 500 more P/E? Or PIGS squeeling = safe haven buying (PMs and yes, treasuries, as witnessed today)? Last time the PIGS were rolling over, short the Euro, long Gold was a hadgie favorite. Even as an alternative, short dollar long gold seems a little lacking right now. Thoughts?
Hmm. Badly overpriced as opposed to.. goodly overpriced?
I like your response.
Goodly overpriced is when the price reflects no fundamentals but is a good buy because it will keep going up.
Jim Cramer usually knows whats goodly overpriced. Put all your money in with him.
"...especially without a QE3"
Hmm ... it sounds like a plea for more QE.
I'm glad to see Jeremy agrees with my take on this market.(s)
http://ghickeyblog.blogspot.com
again....
gh
Ouch! Didn't he get a copy of Blankfein's "Everything is Fine" memo?