6/4 allocation is useless, U.S. stocks may plummet 50%? Bubble Prophet: This time it’s almost certain

A well-known investor who has been warning about stock market bubbles for decades, “bubble predictor” Grenson said that the U.S. stock market is entering the historic collapse he predicted a year ago, and even if the Federal Reserve intervenes, it will not be able to stop it. 50%.

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According to “Bloomberg” report, Glenson, who co-founded GMO Asset Management Company, pointed out in the report that the US stock market is in the fourth “super bubble” in the past century, and is similar to the stock market crash in 1929, the burst of the Internet bubble in 2000 and the bursting of the Internet bubble in 2008. Like the financial crisis of 2018, he is convinced that the bubble will burst, bringing the broader market index back to statistical normalcy, possibly even deeper.

That means the S&P 500 could be down 48% — to 2,500 — from its Jan. 4 peak. The Nasdaq Composite, which has fallen 10.6% this year, could see a bigger correction. “A year ago, I was not as sure about this bubble as the dot-com bust in 2000, the Japan bubble, and the housing bubble in 2007, when I felt like a high probability, but maybe not very sure. However, today I feel It’s almost certain,” Grenson said in an interview with Bloomberg.

According to Grenson’s analysis, the evidence for the “super bubble” is strong. He pointed to the earliest signs of last February, when dozens of the most speculative stocks began to fall, one indicator being Cathie Wood’s Ark Innovations ETF (ARKK), which has plunged 52% since then, and a proxy for Small and mid-cap stocks, the Russell 2000, which typically outperforms in bull markets, have underperformed the S&P 500 in 2021.

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Grenson further mentioned that “investor frenzy” heralded a late stage of the bubble, including the frenzy of meme stocks, electric car stocks, the rise of nonsensical cryptocurrencies such as Dogecoin, and multimillion-dollar asking prices. of non-fungible tokens, or NFTs.

“The factors for the formation of a superbubble are all in place, and storms may come at any time,” Grenson, 83, wrote in the report. “When pessimism returns to the market, we may face the largest asset drawdown in U.S. history.” The impact of the bubble could be comparable to the late 1980s, when Japan’s stock and housing markets both collapsed, he said. Grenson also warned that not only the stock market, but also the bond market has a super-bubble, and the global housing market has the “widest and most extreme” bubble in history, and commodity prices have a “budding bubble.” Even without a full return to statistical trend levels, the U.S. alone could lose as much as $35 trillion, according to his calculations.

Grenson is an investor with 50 years of experience, he has accurately predicted three major market bubbles and is known as the “bubble prophet”. In this case, he argues, the 60/40 traditional portfolio offers little protection and “doesn’t help at all.” He also gave advice to sell U.S. stocks, pick stocks with lower valuations in Japan and emerging markets, hedge inflation, hold some gold and silver, and raise cash positions when prices are attractive again.

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