By Daily Crux Editor Sean Goldsmith:
Jeremy Grantham, Chairman of value mutual fund Grantham, Mayo, Van Otterloo (GMO), told investors the market was undervalued by 30% on March 10 - one day after the actual bottom. Since then, stocks have soared 50%.
But Grantham thinks the current rally is overstated, pegging the S&P's fair value at around 880 (it's at 1026 today) based on earnings estimates and historical P/E ratios. He sees "seven lean years" of market gains ahead to make up for excesses of the past…
"The past 12 years have seen two bubbles that were really good for corporate profits," says Ben Inker, GMO's director of asset allocation. "Now things are unlikely to be anywhere near as good as people have gotten used to, because we're not going to have a bubble to help us."
And Grantham's GMO isn't the only firm saying this rally is overextended…
Read full article...
More bearish perspectives:
"Dr. Doom" Roubini turns bearish again
Top investor Hussman issues bearish warning
Top money manager Einhorn makes huge bearish bet
