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August 12, 2022 | Grantham: Bear Market Update

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

As stocks rebound on disinflation data and hope for less central bank tightening, the tech-heavy Nasdaq is +21% from its June low but remains -18% from its November high. Meanwhile, commodity speculators are back to bidding up prices even as excess inventory of many goods mounts and global demand contracts. Bonne chance tout la monde.

While some proclaim a new bull market, realists note that 20% price rebounds have historically been common within ongoing bear markets. We are very early days in this one, and downside for markets, the economy, animal spirits and interest rates, still looms large.

In a late July video interview, cycle expert Jeremy Grantham offered context for what’s happening now as follows:

“There’s nothing as quick and spectacular as a bear market rally. With hindsight, they signify very little, but at the time, they frighten the pants off bears, and they give hope that all is over, all is forgotten, and it’s back to the races.” (Grantham suggested the current rebound in stocks could continue into September.)

“In terms of the entire bear market, it would be unusual for it to bottom out anywhere near this high. I would expect that by the low, the S&P would have declined by 50% from the peak in real terms.”

The Business Insider summarized ten standout quotes from the interview here. The full far-reaching discussion is available below.

Jeremy Grantham is the co-founder and Chief Investment Strategist of Grantham, Mayo and van Otterloo or more commonly known as GMO – a Boston-based asset-management firm. I last spoke with Jeremy almost exactly a year ago on episode 371 and I highly recommend you revisit it to see how prescient his predictions were at the time. In this episode, I wanted to get Jeremy’s thoughts on how the markets have materialized since we last spoke, but I also wanted to dive deeper into his knowledge around climate change. Here is a direct video link.

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August 12th, 2022

Posted In: Juggling Dynamite

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