Famous investor Jeremy Grantham, who is known for his past predictions of the dot-com crash and the financial crisis, warns of another epic bubble in financial markets that is bursting.
Grantham called the current state of the market “one of the great bubbles of financial history” in 2021. Since then, US stocks have dropped by about 15%, but Grantham sees much steeper declines on the horizon, with the best-case scenario being a fall of about 27% from current levels and the worst-case scenario being a plunge of over 50%.
Grantham sees uncomfortable parallels between markets today and 2000 and 2008, and he warns that bubbles in the stock market and the real estate market are poised to burst simultaneously.
Central bankers are blamed for the emergence of the latest market bubble, as they pursued policies in recent decades that artificially drove up the value of financial assets, setting the stage for crashes. Longer-term trends, such as climate change and aging populations, could also prop up inflation for years to come.
