Is the bubble only starting?
READY for a melt-up? Investors are generally upbeat about the prospects for equity markets this year but one intrepid fund manager thinks it is likely that American share prices could rise by 50% in the next six months to two years. Perhaps the biggest surprise is the identity of that pundit: Jeremy Grantham.
Mr Grantham, one of the founders of the fund management group GMO, is best known for a cautious approach to valuations. He was one of the investors who got out of the dotcom boom well before the top. His firm’s most recent prediction for seven-year returns are for an annual loss of 2% from American largecap equities; indeed among all the asset categories, only cash and emerging market equities and bonds and cash are expected to produce a positive real return over the seven-year period.
