At the height of market fears in the last month, GMO co-founder said the superbubble has yet to
deflate. His bearish overtones are not helping GMO funds. Investors continued to withdraw their
holdings in the last decade.
Investors may appreciate this investor’s warnings. Grantham believes the mid-June to mid-August stock
rally mirrors that of other bear market rallies. His view is simple to confirm. Look at the S&P 500 chart
before 2021. Recently, markets rose because the Fed and the government poured trillions to stimulate
the economy.
Globally, central banks that mattered unilaterally raised rates to hurt demand. Countries like China are
the exception. China must spur real estate stability after setting the three red lines to pop the
speculative bubble.
Investors are foolish to believe they may time the superbubble’s deflation. It will happen slowly and
then quickly.
Watch for signs.
Penny stocks and pre-bankrupt firms like Bed Bath, and Beyond rising from $5 to over $23 recently
suggest the bubble did not pop.
Secondly, Bitcoin’s bounce from the $19-$20,000 support level suggests that the strong crypto market
defies market fear. BTC prices need to fall steadily to indicate a bubble deflating for stock markets.
