Source: A Wealth of Common Sense
Is This The Top?
June 24, 2015 1:30pm by Barry Ritholtz
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This time it’s different (pulling tongue from cheek).
Nah.
“Nobody knows nothin’.”
I think it is close, all things being equal that is. Unless of course US growth accelerates. The Fed is going to hike and that is all the professional market participants are looking at. Always try and determine what the others guys will/are doing.
Grantham’s commentary and forecasts are appreciated over the full cycle. His firm, GMO, only makes 7-year asset return forecasts, not calls on the next year. Grantham has talked much more about the increasing probability that the market will continue to become unhinged on the upside and enter a full fledged bubble. His caution is for value investors.
This article [http://www.advisorperspectives.com/newsletters15/25-are-grantham-and-hussman-correct-about-valuations.php] questions GMO’s 7-year forecast made in Nov. 2013 by noting that the market has been up sharply since then. However, if we do the math, GMO’s forecast indicates the S&P500 trading at about 1,500 in early 2019, for a price decline from today of about 30% and a total nominal return in the low 20%s.
Time will tell, but since this article is simply a visualization of stock prices along with select events, try drawing the same chart, but over a longer time frame – say five decades. Then draw a wiggly line that takes the S&P 500 to 1,500 in the next four years. You’ll find that it would not look at all out of the ordinary. It would look like routine market behavior.