Jeremy Grantham, Co-Founder of Legendary AM shop, GMO, says we're in a bubble of "epic proportions"

Has anyone seen this recent interview where Grantham is basically saying that there will be another big crash in the soon future and to rebalance your portfolio into 70% emerging market value stocks and 30% cash? 


Any thoughts? I can see where he's coming from based on the sheer amount of outstanding margin debt, historical highs in PE ratio, continued QE, and very irrational retail behavior. However, all we all know, the markets can stay irrational much more than we can stay solvent. What is your portfolio like at the moment?


Full Youtube interview here: 


 

beat me to it. I sincerely hope grantham doesn't become john hussman who said in october 2009 that stocks aren't cheap enough

their 2 largest funds (GQETX and GBMFX) are still down on a 5y basis and their quality fund is down right in line with S&P. while their benchmark free fund is down less than everything this year you have to ask yourself if it's worth it to lag for so long. rather, I like howard marks's mantra of staying mostly fully invested (see below). also, they come from the same generation and howard's performance far outpaces jeremy's

Because we do not believe in the predictive ability required to correctly time markets, we keep portfolios fully invested whenever attractively priced assets can be bought. Concern about the market climate may cause us to tilt toward more defensive investments, increase selectivity or act more deliberately, but we never move to raise cash. Clients hire us to invest in specific market niches, and we must never fail to do our job. Holding investments that decline in price is unpleasant, but missing out on returns because we failed to buy what we were hired to buy is inexcusable.

 

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