Billionaire legend Jeremy Grantham is issuing a dire warning for the US industry, believing that stocks could show a major collapse similar to the dot-com bubble.
In an interview with CNBC, Grantham he warns that the market valuation is now comparable to that seen during the dot-com bubble of the early 2000s.
According to the billionaire investor, his metrics show that equities are too high.
“In a real sense, I’m not sure there’s a parallel, but the technology bubble of 2000 will come very close. In the ways that the value system predicts the most, in terms of the value of the stock market compared to GDP and changes, this is the most expensive stock market in American history.”
Although Grantham says the fall is difficult to time, he says it could happen by 2028.
“I think it’s somewhere between two weeks ago, two weeks from now, two months, two quarters, and obviously two years; the timing is always very uncertain. The market will peak and then go back to what’s going on.”
He also reminds investors that during the dot-com bubble, the NASDAQ dropped 80%.
“Remember, we said 75% of the NASDAQ was down in 2000, in our quarterly reports, and it’s down 82%.
At the time of writing, the NASDAQ is worth 29,839. A 70% drop would see it trade below 9,000.
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