Foreign media reports, whether it is construction timber, raw materials, virtual currency “a brother” bitcoin to stocks, many assets are soaring at the same time, the past is quite rare, so senior investors are quite uneasy.
Jeremy Grantham, founder and chief investment strategist at GMO Asset Management, said, “This is a very different bubble than we’ve experienced in the past. Previous bubbles came when the economy looked perfect, but this one started going up when the economy was hit hard.”
He has accurately predicted several economic crises in the past, including the Japanese asset bubble in the late 1980s, the dot-com bubble in 2000 and the subprime crisis in 2008. He is regarded as a “legendary disaster prophet”.
In the face of “all things going up”, it is reminiscent of the Roaring ’20s and the dot-com bubble. Both had dramatic crashes, and it took years for the stock market to return to its former level, with investment experts fearing a repeat of history and even speculating that the magnitude of the pullback could be even greater.
In fact, data shows that the U.S. benchmark index is currently trading at a P/E ratio of about 26 times. But another measure – the cyclically adjusted P/E ratio of U.S. stocks (CAPE Shiller P/E ratio, also known as Shiller P/E ratio) has risen to a new 20-year high of 37.6 times.
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