Thursday, December 3, 2009

Jeremy Grantham Goes Back to the Dark Side

After making an unbelievable bullish call and riding the market from its March lows Jeremy Grantham has officially rejoined the bears (he really never left) and has joined the darkside. He gives 14 reasons why a Great Depression 2 is probable.

From marketwatch:

First: Kiss the rally good-bye, says Jeremy Grantham, legendary CEO of the $101 billion GMO money-management firm.

Why? The market is overvalued 25%. A minimum 15% correction is coming in 2010, putting the Dow in the 8,000-9,000 range. The S&P 500? Not at 666 like last spring; maybe 800. Why a top? Black Friday? Dubai? Tiger Woods? All the dark films? The "2012" end of civilization? The post-apocalyptic "The Road?" Stop guessing, timing market turns is irrational.

Grantham's shift from bull to bear appears rational.


Now Grantham's warning us again: America's irrational nightmare will repeat. First, the short-term correction, 15% to 25%. But then long-term, a deadly warning: Disaster ahead. Why? Because America has "learned nothing," we are "condemning ourselves to another serious financial crisis in the not too-distant future."

The article goes on to mention 14 points that Jeremy brings up. Of course of the all the critics of Greenspan and Bernanke Grantham is one of the loudest.

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