Yesterday was gruesome:
This year has been gruesome, except for energy and some pharma. this is a year to date heat map.
There have been as many predictions as Carter had liver pills. (I actually bought this metal plague on eBay to remind of predictions and “cures”.)
I am 73% in cash. I have accounts — one with Fidelity where I try to be intelligent and pick hot stocks. And one with Vanguard that consists entirely of two index funds — VGT and VTI — which I don’t touch. You don’t have to be a genius to to know which one has done better. Which makes me profoundly depressed.
My previous blog was headed “Will stocks fall further? The consensus is Yes. Mr. Market is ornery. And …..“
Everyone and their uncle has predictions. I’ve been reading and watching.
Jeremy Grantham was on CNBC yesterday, which wrote a story this morning “Jeremy Grantham says today’s bubble is worse than 2000, calls stocks to at least double their losses.”
If you subscribe to CNBC Pro (I do), you can read the summary and watch the video. Click here.
Here are some sentences from that CNBC Pro article:
“The other day, we were down about 19.9% on the S&P 500 and about 27% on the Nasdaq. I would say at a minimum, we are likely to do twice that,” the co-founder of GMO told CNBC’s Kelly Evans on “The Exchange” Wednesday. “If we are unlucky, which is quite possible, we would do three legs like that and it might take a couple of years as it did in the 2000s.”
Grantham is a widely followed investor and market historian, known for predicting the 2008 bear market and the burst of the dot-com bubble in 2000. He has been warning of extreme speculative activities in the market since the depth of the pandemic
“This bubble superficially looks very much like 2000, focused on U.S. tech and led by the Nasdaq going to incredible highs,” Grantham said.
The technology sector has been at the epicenter of the market turmoil this year, especially hitting unprofitable firms and richly valued software names. The tech-heavy Nasdaq Composite is sinking deeper into a bear market in the face of rising rates, off about 29% from its all-time high.
Still, the 83-year-old investor said there are some key differences to the two bubbles. In 2000, the sell-off was concentrated in U.S. stocks, while other assets like bonds, commodities and housing held up well, Grantham said.
“We are really messing with all of the assets. This has turned out historically to be very dangerous,” he said. “The combination of stocks and housing proved quite dangerous. We would have a severe recession.”
At the beginning of 2022, Grantham issued a dire warning, saying the end of “bubble extravaganza” was coming and called for stocks to drop 45%.
I’ve sold virtually all my “expensive” tech stocks. I don’t have any which are losing money. I have some energy stocks. My biggest present winner is UNH. Go figure. Apple is my biggest loser.
I’m going to play tennis this morning. That will give me more pleasure than watching the tape.
I do like this science:
See you very soon. — Harry Newton
