Investment Legends and the Stock Market

What are the legends of Wall Street saying, doing or might have done when it comes to investing? Here's three examples that indicate that we are in a bubble: 

Jeremy Grantham 

Jeremy Grantham of GMO gave an extensive 38 minute interview to Bloomberg about what he considers to be a bubble that will result in a crash that will rival 1929 and 2000.

 

For those who might not have 38 minutes to spent watching the video, Business Insider (Feb 24) wraps things up nicely. Here are a couple quotes:

"This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We'll be rather lucky to have this bubble last until May."

"When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you're getting very warm."

Warren Buffett

Warren Buffett of Berkshire Hathaway is acting in a particular way when it comes to investing: cautious.

Barron's (Feb 27) writes:

Among the reasons for the underperformance is Berkshire’s inability to find what he has called an elephant-size acquisition to sop up Berkshire’s enormous cash holdings, which totaled $138 billion at year-end 2020.

Jack Bogle

What might the late Jack Bogle of Vanguard be thinking at the moment?

Marketwatch via MSN (Feb 20) considers:

Two years before he died, in 2017, Bogle warned that U.S. stocks were already so expensive that longer-term, 10-year returns on a broad stock market index fund were likely to be meager at best.

. . . Bogle’s forecasts implied that the Vanguard Total Stock Market Index Fund (for example) would rise a total of 50% between March 2017 and March 2027.

But it’s already risen 70% — with six years to go. Not to put too fine a point on it, but to hit Bogle’s forecasts it would have to lose more than 2% a year through 2027.

Now Jack Bogle died in January 2019 so who knows what he'd be saying for sure in mid-2021, but Marketwatch does a compelling attempt to explain that he'd think we're now in a bubble.

Listening to legends of investing is important considering how many cities, counties and other government agencies are going down the path of pension obligation bonds such as Whittier and Montebello.