The conventional wisdom today is that U.S. stock prices are high and a correction is due. But what if stock prices actually can stay elevated for a long time to come? U.S. stock valuations have been high for longer than many expected. As Jeremy Grantham of money manager GMO shows in the chart below, the […]
Jeremy Grantham
Big Picture Investment Thinking…
These are strange and difficult times for investors. U.S. stocks are up, but only a handful of companies are driving the indices while a lot of issues are hitting new lows. Storminess in China and Greece, and weakness in oil, gold, and commodities are creating anxiety. And while earnings reports haven’t been disastrous, downward guidance […]
It takes a trigger to burst a bubble: Broad overvaluation alone won’t do it
Source: Marketwatch At a recent Morningstar event, Jeremy Grantham of Boston investment firm GMO said stock valuations are high, but we’re not in bubble territory yet. The current market PE of 21 exceeds the normal 16, and corporate profit margins of 7.3% remain well above the historical norm of 5.7%. Eventually those will have to […]
