GMO News & Analysis

Grantham Warns 70% U.S. Stock Drop Possible Amid Market Valuations

Jeremy Grantham, co-founder of GMO Asset Management, warns that U.S. stocks could decline by 70%, citing the current market as the most expensive in history. Over the past year, QQQ increased by 33% and SPY by 21%. Grantham's framework suggests that all 26 historical bubbles reverted to trend, leading him to conclude a peak-to-trough collapse is possible. He emphasizes that the timing for this decline is uncertain, which he estimates may take from 2 weeks to 2 years to materialize, driven by high P/E ratios and economic factors.