Sage Grantham believes stocks overpriced again
Denver Post wire services
Posted: 01/31/2010 01:00:00 AM MST
Jeremy Grantham, the chief investment strategist of GMO, says stocks are expensive today. Here's why you should care: He predicted the collapse of a major bank and a big fall for stock prices in 2007.
That was months before stocks peaked and before most anyone had thought to pair "toxic" and "mortgage" in a phrase.
In a quarterly letter posted on GMO's website, Grantham wrote that the S&P 500 index is now worth about 850, 20.8 percent below its closing price Friday. He predicts "seven lean years" of below-average economic growth and says low-quality stocks have risen too far.
Grantham sometimes gets criticism for being a "perma-bear." But he isn't always pessimistic. In March 2009 — right when the market bottomed — he said that stocks looked cheap.
