Jeremy Grantham got the market’s attention with his “super bubble” call on U.S. stocks. Now he wants to get an even more alarming and urgent message out, one his critics may find harder to accept.
The “Goldilocks” period of the past 25 years is ending, and the world needs to prepare for a future of inflation, slower growth and labor shortages, the renowned value investor said in a Bloomberg “Front Row” interview.
The Buffett Indicator
Where Are We with Market Valuations
Interesting video on the tough position the Fed is in. If they sell their assets and have interest rates go up to fast there is a high risk is they miss. There are some extreme conversations on this but there seems to be a lot of head wins where to put your money.
Crash the Stock Market or Stop Inflation: The Fed's Dangerous Predicament | George Gammon
The Bond King Gundlach interview. He talks about Robert Shiller's noble prize winner the Shiller pe cape ratios are 35 which is double the rest of the works. Please note 8 out 10 times within 6 days the market crash’s into a recession when the yield curve inverts which means the long-term bonds pay lower rates than lower rates. This is exactly what happened in Oct 2019 and then the crash in March 2019.
We have negative real yields of 6.8% means people are losing at least that. Europe calculates the cpi inflation for the US is 7.8%.
Those in bonds/ bond funds will get hurt and so will people in the market.
How the yield curve is sending a recession 'signal': Jeffrey Gundlach
Introduction Following a strong year for benchmark indices in 2021, we think speculation and inflation are two key narratives, amongst many, that may impact markets in 2022. Prof. Shiller views the current environment as being somewhat like the Roaring Twenties in which, on the tail end of the 1918-1919 Spanish Influenza pandemic, there were frenetic celebrations, spending sprees, and a “carnival of extravagance unheard of in history” – and yet ultimately, a U.S. stock market priced at its lowest level in history by December 1920.
The stock market during most of the Roaring Twenties was the biggest bull stock market in US history when you factor in inflation. Prof. Shiller calculates that the real total return for the Standard & Poor’s Composite Index (an S&P 500 predecessor), including dividends, from September 1919 to September 1929, averaged 20% a year. That implies a sixfold increase in real value over the decade. At the end, however, the index dropped 77% from September 1929 to June 1932.
Today, the annualized returns for the S&P Price Return Index are 14% over the last decade. Not as spectacular but certainly solid, and we are seeing strong parallels between the Roaring Twenties and the environment today. In the 1920s there was a sharp rise in trades by inexperienced retail investors, a surge in technological innovation and new mass media. The world entered homes electronically with radio, giving people an immediate sense of the possibility of new technologies and access to a global narrative about financial success. This is not dissimilar today as we gingerly enter a post-COVID world filled with latest technologies such as crypto coins, artificial intelligence, NFTs and the metaverse.
Economist Wade Pfau has been thinking about retirement since he was in 20s. But not just his own retirement.
Pfau started studying Social Security for his dissertation while getting his Ph.D. at Princeton University in the early 2000s. At the time, Republicans wanted to divert part of the Social Security payroll tax into a 401(k)-style savings plan. Pfau concluded it might supply sufficient retirement income for retirees—but only if markets cooperated.
Today, Pfau is a professor of retirement income at the American College of Financial Services, a private college that trains financial professionals. His most recent book, “Retirement Planning Guidebook,” was published in September.
While many retirees are banking on a continuing rise in stocks to keep their portfolios growing, Pfau worries that markets will plunge and imperil this “overly optimistic” approach. He has embraced oft-criticized insurance products like variable annuities and whole-life insurance that will hold their value even if stocks crash, and he has done consulting work for insurers. He wrote another book, “Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,” because these loans also can be used as “buffer assets” during market meltdowns.