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Let the Wild Rumpus Begin

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Let the Wild Rumpus Begin

(Approaching the End of) The First U.S. Bubble Extravaganza: Housing, Equities, Bonds, and Commodities

GMO,

5 min read
3 take-aways
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What's inside?

Renowned investor Jeremy Grantham predicts the implosion of massive asset bubbles in several markets.


Editorial Rating

9

Qualities

  • Analytical
  • Eye Opening
  • Insider's Take

Recommendation

Renowned investor Jeremy Grantham spotted early signs of the market corrections in Japan in 1989, the US tech wreck in 2000 and the housing collapse of 2008. Now he points out that “superbubbles” have arisen in housing, stocks, the credit market and commodities, and he lays out the case for why these could very well burst at any time, with devastating impacts. While getAbstract never offers investment advice, investors and executives will find this a rigorous examination of historical and modern-day evidence.

Summary

The United States is in the midst of what could be the greatest “superbubble” in American history.

Asset bubbles – defined as 2-sigma deviations from trend in a normally distributed price dataset – are a painful but common occurrence in economic cycles. However, extreme “superbubbles” – defined as 3-sigma events – are rare. These have some aspects in common, including extreme price acceleration and signs of investor mania. The United States experienced superbubbles in equities markets in 1929, technology stocks ...

About the Author

Jeremy Grantham is a co-founder of GMO LLC, a member of GMO’s asset allocation team and the firm’s long-term investment strategist.


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