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Waiting for the Last Dance
Report

Waiting for the Last Dance

The Hazards of Asset Allocation in a Late-stage Major Bubble

GMO, 2021


Editorial Rating

9

Qualities

  • Eye Opening
  • Visionary
  • Insider's Take

Recommendation

In 2008, a speculative bubble in housing, mortgages and derivatives imploded with disastrous consequences. Eight years earlier, investor-fueled dot-com mania sputtered out. Now veteran market professional Jeremy Grantham, the co-founder of investment firm GMO, sees new market froth forming. Citing inflated valuations, massive price expansion and a disconnect from fundamentals, he advises that timing a market exit may not be as critical as recognizing that the fall will occur. Investors will find intelligent insights from the vantage point of experience in this illuminating report.

Take-Aways

  • Long bull markets eventually correct – and severely – and the present expansion is primed for such a reversal.
  • Several factors reveal when markets are overextended.
  • Investors believe that the Federal Reserve will be the financial market savior and extend the rally, but this notion does not align with previous events.

About the Author

Jeremy Grantham is the cofounder of GMO, LLC and the firm’s chief investment strategist.


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