Legendary investor Jeremy Grantham says US stocks are in a crazier bubble than in 1929 - but this 'vampire' market is shrugging it off
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- Jeremy Grantham has said US stocks are in a magnificent bubble which is crazier than 1929.
- But he said the market is like "a vampire" that is hard to kill and will just shrug off bad news.
- Grantham said meme stocks, SPACs and cryptocurrencies are signs of market craziness.
- See more stories on Insider's business page.
US stocks are in an even crazier bubble than before the great market crash of 1929 that preceded the Great Depression, legendary investor Jeremy Grantham has said.
Yet Grantham told CNBC on Tuesday that the end of a stock-market bubble is "like killing off a vampire." He said markets were so confident that they just shrug off any bad news.
However, Grantham said that can't last forever and he expects sharp falls in the coming months.
The famous investor, who cofounded investment firm GMO, told CNBC on Tuesday equities are in a "magnificent bubble" in the US.
"This has been crazier by a substantial margin than 1929 and 2000, in my opinion," Grantham said. The year 2000 saw the internet stock dotcom bubble collapse.
Grantham said he thinks the S&P 500 is likely to decline 10% or more in the coming months. He pointed to the popularity of so-called meme stocks, special purpose acquisition vehicles (SPACs) and cryptocurrencies as signs that financial markets are extremely confident and are due for a fall.
But Grantham said the vampire-like stock market may power on for a while, ignoring the bad news around it.
"The market is so into optimism that even as the data turns against it, as it is today, the market shrugs it off," he said. "So interest rates are beginning to go up: shrug. So the Fed is beginning to talk about pulling back on its purchasing of bonds: shrug."
US stocks fell the most since May on Tuesday as some of the issues Grantham mentioned worried investors, with technology shares particularly hard hit.
US futures rose on Wednesday. The S&P 500 remains 16% higher for 2021 so far, and has risen more than 30% over the last year.
Grantham is a widely respected investor and market analyst who has a track record of spotting stock-market bubbles as they develop.
However, some see him as overly pessimistic about equities, which have been supported by huge amounts of central bank stimulus.
Grantham said stocks were in a bubble in June 2020, since which time the S&P 500 has risen around 40%. He told CNBC that no-one can predict exactly when a bubble will pop, but he added it could happen "any time now."
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