Thursday, November 11, 2010

Jeremy Grantham (GMO) - Global Markets Looking Forward (CNBC)

Are we in for a bull market out of control?  Borrowing at negative rates makes this absolutely a possibility.  '91 >>>>> '99-00 bust >>>>> '07 bubble .... '08-09 bust >>>>> and on and on.  The bubbles always break.  The Fed is NOT designed to have the tools that are effective.  Fiscal policy is the KEY!    Japan has paid (is paying?) the Twenty Year price for the biggest bubble ever.  US equity markets - seven year horizon - potential to become dangerously overpriced - bubble territory.  Bonds are even worse.  S&P is Fair Value at 900.  Blue Chips.  Emerging Markets (EEM).  And overweighted to CASH.

Natural Resources.  Commodities.  Oil.  Gas.  Minerals.  Ag.  Timber.  Land.  Value in the ground.  These sectors will win in the 10-20yr time horizon.

FED wants to bid up equities.  So you will spend a little more.  But you will give it all back.  And at absolutely the wrong time. Just like in '08-09.

With a true currency war - all bets are off.  As long as we have QE3, 4, 5, 6.... we should avoid that.  USD will be irregularly weak until we finish the QE game.

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