HN Theater @HNTheaterMonth

⬐ thread_id

Grantham is always brilliant, but this interview is landmark. Markets for assets have become unhinged. He articulates the dynamics with perfect clarity.

⬐ failwhaleshark

People really want magical realism to be true right now more than ever due to conditions (their inelastic needs) caused by the pandemic and decades of inequality.

"When there are no doubters..." that's when to worry about irrational exuberance.

"Burst of euphoria" should be called "last orgasm over-expanding productive capacity."

The economy is walking on air over a cliff like Wile E. Coyote structurally due to the reasons Grantham outlines. Big fail impending.

⬐ failwhaleshark

The American Empire is on its way down by a confluence of apathy, corruption, inequality, anti-community, overstretched military / spending, lack of lofty goals and successes, and ascendancy of rivals like China and India.

As such, more and larger absurd man-made (mostly negligence/selfishness) catastrophes will occur in America, engineered by the cognitive dissonance of insulated true believers over-stretching their capabilities while trying to wallpaper over the risks and dire circumstances of reality everyone else was already experiencing. (K-shaped recovery.)

Many people anticipated 2008. In 2005, I recall talking with a former manager who was on an interest-only loan while he sat on his 2nd flipped house as it rapidly appreciated. The gambit was to refinance immediately to a fixed loan just as soon as there was any clear weakness in the economy.

It's not really mentioned in the article but the rise of speculative trading is fairly normal at the end of a bull market. People see their friends stocks have gone up and figure they can get in on that too. (Jeremy Grantham going on about such stuff https://youtu.be/RYfmRTyl56w?t=195)

As a long term investor though thinking 'this too shall pass' is quite a good strategy which means at some point the high prices will fade and you will be left with your dividends and earnings which at current prices are not giving you much of a yield.

Also I've been following Jeremy Grantham who is now preaching that the end is nigh. He has a good track record https://youtu.be/RYfmRTyl56w

He recommends emerging markets and value stocks by the way where valuations are more reasonable.

Jeremy Grantham co-founded the investment firm GMO. They're famous for 7 year forecasts by asset classes. Here's the bearish December 2020 forecast: https://www.gmo.com/americas/research-library/gmo-7-year-ass...

He's been overly bearish for quite some time, here's the 7 year forecast from December 2009: https://ritholtz.com/2010/01/7-year-asset-class-forecasts/

Here's a recent talk he gave: https://www.youtube.com/watch?v=RYfmRTyl56w&ab_channel=Bloom...

⬐ sfblah

Just in case not everyone clicks it, the forecast from 2009 is actually bullish.