'Epic' financial crash on its way and 'everybody will get hurt' as superbubble bursts

[AsleepInYorkshire]

'Epic' financial crash on its way and 'everybody will get hurt' as superbubble bursts

Last month's banking crisis triggered panic and anybody who thinks it has been resolved is in for a shock. It will soon be back with a vengeance, according to renowned US investor Jeremy Grantham, who says the situation is "ominous".

When Grantham talks, investors listen, because this man has serious form. He made his name forecasting the dot.com crash in 2000, then repeated the trick by predicting the great financial crisis of 2007/08.

AiY(D)

[NotSure]

...Yet Grantham has been issuing similar warnings for years, during which time markets have soared.

The founder of investment company GMO said in November 2010 that he thought the Fed was creating a bubble and that stocks could "crack" in 2011 or 2012. Since then, S&P 500 has risen more than 260%.

He said in January 2018 that "we are currently showing signs of entering the blow-off." The S&P 500 has since rallied 60%......

https://markets.businessinsider.com/news/stocks/jeremy-grantham-gmo-crash-bubble-prediction-us-stocks-warning-wrong-2022-1

[odysseus2000]

The perfect storm is building:

Fed raises rates, US regional banks go bust & the US banking system then collapses like dominoes.

US congress some how manages to not raise the debt ceiling.

AI becomes sentient & sets about doing a skynet.

Regards,

[GoSeigen]

'Epic' financial crash on its way and 'everybody will get hurt' as superbubble bursts

Last month's banking crisis triggered panic and anybody who thinks it has been resolved is in for a shock. It will soon be back with a vengeance, according to renowned US investor Jeremy Grantham, who says the situation is "ominous".

When Grantham talks, investors listen, because this man has serious form. He made his name forecasting the dot.com crash in 2000, then repeated the trick by predicting the great financial crisis of 2007/08.

So what? This sort of stuff appears regularly in the opinion columns. Why post it now? Please make some sort of contribution when posting links like this.

GS

EDIT:
Here's a list I compiled about a year back of "The Crises" we were facing, according to writers in the Guardian. In spite of them all we are still here. I doubt a little US Regional Banking Crisis will make any major difference.
The Climate Crisis
The COVID Crisis
The Cost of Living Crisis
The Energy Crisis
The Energy Bill Crisis
The Fuel Crisis
The Ukraine Crisis
The Late Payment Crisis
The Housing Crisis
The UK Labour crisis
The NHS Staffing Crisis
The High Street Crisis
The School Staffing Crisis
The Poland-Belarus Border Crisis
The Supply Chain Crisis
The Tory Sleaze Crisis
Europe's Migration/Refugee Crisis
America's Water Crisis
The Southern rail crisis

[simoan]

...Yet Grantham has been issuing similar warnings for years, during which time markets have soared.

The founder of investment company GMO said in November 2010 that he thought the Fed was creating a bubble and that stocks could "crack" in 2011 or 2012. Since then, S&P 500 has risen more than 260%.

He said in January 2018 that "we are currently showing signs of entering the blow-off." The S&P 500 has since rallied 60%......

https://markets.businessinsider.com/news/stocks/jeremy-grantham-gmo-crash-bubble-prediction-us-stocks-warning-wrong-2022-1

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day. One day he’ll likely be right again, but in the meantime keeping all his money under his mattress will have got him less than nowhere.

[monabri]

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day. One day he’ll likely be right again, but in the meantime keeping all his money under his mattress will have got him less than nowhere.

That's the thing, has he ? I bet GMO are still accepting €£$ to invest in their funds!

[simoan]

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day. One day he’ll likely be right again, but in the meantime keeping all his money under his mattress will have got him less than nowhere.

That's the thing, has he ? I bet GMO are still accepting €£$ to invest in their funds!

I'd need to care what he is doing to answer that question

[odysseus2000]

https://markets.businessinsider.com/news/stocks/jeremy-grantham-gmo-crash-bubble-prediction-us-stocks-warning-wrong-2022-1

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day. One day he’ll likely be right again, but in the meantime keeping all his money under his mattress will have got him less than nowhere.

This may all be true, but the art of investment is to know when one can follow historical trends and when one can't due to some previously unknown change.

In the US interest rates have gone from 0 (zero) to the current level of circa 5%. this makes the changes initiated by Volka to bring down inflation look like nothing.

These increased and still increasing interest rates are a severe shock to the system, never before experienced and that makes me pause as to saying this is all noise and can be ignored. This may be an historic turning point and the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

Regards,

[simoan]

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day. One day he’ll likely be right again, but in the meantime keeping all his money under his mattress will have got him less than nowhere.

This may all be true, but the art of investment is to know when one can follow historical trends and when one can't due to some previously unknown change.

In the US interest rates have gone from 0 (zero) to the current level of circa 5%. this makes the changes initiated by Volka to bring down inflation look like nothing.

These increased and still increasing interest rates are a severe shock to the system, never before experienced and that makes me pause as to saying this is all noise and can be ignored. This may be an historic turning point and the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

Regards,

I'm sorry, but if you want a "macro" discussion, you've picked the wrong person. I laugh in the face of anyone who predicts what will happen tomorrow, let alone further into the future. Investing is a skill, not an art, and the real skill is in knowing what you don't know and understanding what you can't control. Investing is 10-20% about finding good companies to invest in and 80-90% about controlling your own stupidity, biases and irrationality IMHO. I have found over the years it helps a lot if you ignore market commentators and Bloomberg talking heads like good old Jeremy. As monabri points out, how can you take seriously someone that doesn't eat their own cooking?

[odysseus2000]

This may all be true, but the art of investment is to know when one can follow historical trends and when one can't due to some previously unknown change.

In the US interest rates have gone from 0 (zero) to the current level of circa 5%. this makes the changes initiated by Volka to bring down inflation look like nothing.

These increased and still increasing interest rates are a severe shock to the system, never before experienced and that makes me pause as to saying this is all noise and can be ignored. This may be an historic turning point and the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

Regards,

I'm sorry, but if you want a "macro" discussion, you've picked the wrong person. I laugh in the face of anyone who predicts what will happen tomorrow, let alone further into the future. Investing is a skill, not an art, and the real skill is in knowing what you don't know and understanding what you can't control. Investing is 10-20% about finding good companies to invest in and 80-90% about controlling your own stupidity, biases and irrationality IMHO. I have found over the years it helps a lot if you ignore market commentators and Bloomberg talking heads like good old Jeremy. As monabri points out, how can you take seriously someone that doesn't eat their own cooking?

I am not making a prediction, I am merely noting that something substantial has changed.

Whether this causes anything to change I have no idea, I just note it and watch prices.

I noticed the start of covid, thought it not important, then got wary as prices started to fall and sold a lot of equity before prices collapsed and was late back in as my mind set was still on doom and nothing had changed as far as I could tell, but it had and prices told that tale.

Regards,

[Dod101]

This may all be true, but the art of investment is to know when one can follow historical trends and when one can't due to some previously unknown change.

In the US interest rates have gone from 0 (zero) to the current level of circa 5%. this makes the changes initiated by Volka to bring down inflation look like nothing.

These increased and still increasing interest rates are a severe shock to the system, never before experienced and that makes me pause as to saying this is all noise and can be ignored. This may be an historic turning point and the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

Regards,

I'm sorry, but if you want a "macro" discussion, you've picked the wrong person. I laugh in the face of anyone who predicts what will happen tomorrow, let alone further into the future. Investing is a skill, not an art, and the real skill is in knowing what you don't know and understanding what you can't control. Investing is 10-20% about finding good companies to invest in and 80-90% about controlling your own stupidity, biases and irrationality IMHO. I have found over the years it helps a lot if you ignore market commentators and Bloomberg talking heads like good old Jeremy. As monabri points out, how can you take seriously someone that doesn't eat their own cooking?

I know nothing about this guy but like you I ignore all market commentators. It does not require skill to know what you don’t know and understanding what you can’t control. It just takes realism, common sense and certain modesty or humility. I regard investing as an art not a skill. I do not study the numbers very much and prefer the ‘softer’ issues. If there is a skill it is in knowing your limitations.

Dod

[simoan]

I know nothing about this guy but like you I ignore all market commentators. It does not require skill to know what you don’t know and understanding what you can’t control. It just takes realism, common sense and certain modesty or humility. I regard investing as an art not a skill. I do not study the numbers very much and prefer the ‘softer’ issues. If there is a skill it is in knowing your limitations.

Dod

Well, we'll have to disagree on that. A skill is something you can learn, you can't learn an art. An art is something much more ethereal IMHO that some people have natural talent for and others simply don't, no matter how hard they try. I have found over the years, investing is something you can get better at with practice, and in particular, learning from mistakes. That's a skill. Unfortunately, you only have to observe forums such as this, and watch the way share prices move up and down on the most ridiculously short sighted of premises to know that many people think they know the future based on what is right in front of them now being extrapolated into the future. Often that is based on some crazy macro based thinking.

Anyway, I'm clearly preaching to the wrong crowd on this board, so i'll sling my hook...

[Dod101]

I know nothing about this guy but like you I ignore all market commentators. It does not require skill to know what you don’t know and understanding what you can’t control. It just takes realism, common sense and certain modesty or humility. I regard investing as an art not a skill. I do not study the numbers very much and prefer the ‘softer’ issues. If there is a skill it is in knowing your limitations.

Dod

Well, we'll have to disagree on that. A skill is something you can learn, you can't learn an art. An art is something much more ethereal IMHO that some people have natural talent for and others simply don't, no matter how hard they try. I have found over the years, investing is something you can get better at with practice, and in particular, learning from mistakes. That's a skill. Unfortunately, you only have to observe forums such as this, and watch the way share prices move up and down on the most ridiculously short sighted of premises to know that many people think they know the future based on what is right in front of them now being extrapolated into the future. Often that is based on some crazy macro based thinking.

Anyway, I'm clearly preaching to the wrong crowd on this board, so i'll sling my hook...

I largely agree with you . I have over the years refined my approach to investing by learning from my earlier mistakes; not that I cannot make mistakes again of, just next time they will be different ones. But I do not regard that as a skill, just common sense.

Dod

[88V8]

This guy is an idiot. He’s predicted 50 of the last two stock market crashes. Worse than a stopped clock and yet the media still give him the time of day.

...the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

The Fed were late to the party and are playing catch-up.
Yes, they may end up fighting the last war and overshoot, but banks should profit from increased rate spread. Short-term, higher rates/defaults may weed out incompetent lenders, improve the breed etc.

V8

[dealtn]

The perfect storm is building:

Fed raises rates, US regional banks go bust & the US banking system then collapses like dominoes.

I am not making a prediction

Hilarious clarification.

What are you doing then?

[odysseus2000]

The perfect storm is building:

Fed raises rates, US regional banks go bust & the US banking system then collapses like dominoes.

I am not making a prediction

Hilarious clarification.

What are you doing then?

Just noting what is happening.

The FED may or may not create more bank runs, they have already killed several banks but show no sign of stopping interest rate rises.

Regards,

[odysseus2000]

...the Fed don't seem to care, ratcheting up interest rates as inflation does not respond and so who knows how high they go and what damage this may do to the banking system.

The Fed were late to the party and are playing catch-up.
Yes, they may end up fighting the last war and overshoot, but banks should profit from increased rate spread. Short-term, higher rates/defaults may weed out incompetent lenders, improve the breed etc.

V8

As I understand the US banking troubles, a lot of banks have bought treasuries at lower levels when interest rates were much lower. These treasuries are now well underwater and to sell is to bring the banks down, but they can not compete with the Fed interest rate rises.

Customers of the banks can either accept very low rates or they can close their accounts and buy treasuries. It is quite simple from the customers perspective: Accept low rates of around say 1% or less or buy treasuries and get around 5%. An investor with $1 million can either accept <$10k a year, or move to treasuries and trouser $50k.

If people continue to do this then banks fail from a run on their deposits.

Of course the risk of going for 5% is that the politicians don't raise the debt ceiling and treasuries default.

Regards,

[dealtn]

The Fed were late to the party and are playing catch-up.
Yes, they may end up fighting the last war and overshoot, but banks should profit from increased rate spread. Short-term, higher rates/defaults may weed out incompetent lenders, improve the breed etc.

V8

Customers of the banks can either accept very low rates or they can close their accounts and buy treasuries. It is quite simple from the customers perspective: Accept low rates of around say 1% or less or buy treasuries and get around 5%. An investor with $1 million can either accept <$10k a year, or move to treasuries and trouser $50k.

If people continue to do this then banks fail from a run on their deposits.

You do realise that when they buy treasuries someone else has to sell them? That bank run doesn't happen, the $s get deposited back in the banking system somewhere else.

[odysseus2000]

Customers of the banks can either accept very low rates or they can close their accounts and buy treasuries. It is quite simple from the customers perspective: Accept low rates of around say 1% or less or buy treasuries and get around 5%. An investor with $1 million can either accept <$10k a year, or move to treasuries and trouser $50k.

If people continue to do this then banks fail from a run on their deposits.

You do realise that when they buy treasuries someone else has to sell them? That bank run doesn't happen, the $s get deposited back in the banking system somewhere else.

Yes, but does it get back to the regional banks who need the money immediately?

Several US bank failures suggest not.

Regards,

[TUK020]

The perfect storm is building:

Fed raises rates, US regional banks go bust & the US banking system then collapses like dominoes.

I am not making a prediction

Hilarious clarification.

What are you doing then?

I think Skynet has already taken over.............