Grantham Warns U.S. Stocks Could Plunge 70% / Most Expensive Market in History

5 hours ago

Jeremy Grantham warns that the US stock market is at its most expensive level in history and could face a severe correction of up to 70%.
He bases his bearish outlook on historical valuation trends, noting that P/E ratios since 2010 are 60% higher than the prior century, partly due to cheap money.
Grantham uses a 'two-sigma' statistical framework, comparing current conditions to past bubbles like the 2000 dot-com peak, which saw an 82% Nasdaq decline.
He acknowledges AI as transformative but warns that overinvestment has created a bubble similar to historical examples in railroads and the internet.
Key market indices show strong recent gains, with the Nasdaq-100 up 32.38% over the past year and the S&P 500 gaining 547.93% since 2010.
The timing of a potential market decline is uncertain, ranging from weeks to years, and Grantham emphasizes that calling bubbles is difficult.
Investors should treat his warning as a thesis from a noted bubble-caller, not a guarantee, as markets can stay expensive for extended periods.

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