During his recent interview with the What Goes Up Podcast, Jeremy Grantham explained why this market will not bottom until deep into next year. Here’s an excerpt from the interview:
Grantham: Mostly the great bubbles, when they break, they take a long time.
There’s an exception but they typically take a couple of years, three years, and every now and then they get rid of it in a real hurry. But my guess was this was going to be a long one.
The buy-in to the idea that stocks only go up and the amount of speculative craziness that was set in train by the covid supplemental payments meant that individual participation was actually off the scale, bigger than 2000, bigger than the dotcom, and so this looked like it would have a whole lot of buy the dip from day one.
And it’s had a lot of buy the dip but 2000 had some wonderful rallies.
And even in 1929 it rallied almost 45% off the lows of ’29 until April of 1930. Hell of a rally. Must have made people feel that the worst was over and then it rolled over and went down as you know infinitely almost. Down well over 80% on the S&P and most of the speculative index went down 95 give or take.
Anyway, let’s hope we don’t go there but it just gives you an idea. Great bear markets can have wonderful rallies. Great bear markets can take their time and we have a very very recent one where quite a few players in today’s market experienced 2000 and it went on for three painful years.
And there’s a housing bust was a quick one but not that quick. It took over a year of pretty steady declines. So my guess is this one will not bottom until deep into next year.
You can listen to the entire discussion here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: