The Real Estate market will more than likely burst predicts Mr Grantham to a round table of WSJRenewal.com. He has a knack for spotting bubbles before markets crash. He did it before the stock imploded in 2000 and the 2008 crash.
Grantham founder Mayo Van Otterloo & Co. said US markets were experiencing a “Super Bubble” in the early stages of ugly inflation. 9 months have passed since these statements, and Mr Grantham remains pessimistic
“This is the baddest [fundamental] package we’ve ever seen,” says Grantham, chairman of the board and long-term investment strategy of his company, which managed $59 billion as of June 30. he says he remains well above his long-term averages. This is true to even though economic growth has slowed, inflation has returned and interest rates have reversed after a long decline that helped drive stocks for decades.
Mr Grantham has put his own money into a family foundation which has allocated about half of his assets to young businesses developing green technology, another 25% to other early-stage companies, and the remaining 25% to a few different investments, including one that benefits when the Nasdaq Composite falls in value, and another that benefits when investors see a growing risk of corporate defaults.
He recommends that for average investors, having cash is one of the best options. He rejects the mantra that timing should not be attempted in the market, for example, when the markets in history have taken years and even decades to recover.
Bonds could recover
According to the man responsible for overseeing approximately $2.3 billion in assets. Bonds have had their worst year on record. That’s one reason to be optimistic about the coming year.
“I’m more excited going into 2023 than I have been in a long time because we’re going to have so many different opportunities,” says Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock Inc.
Investors often value bonds with good credit ratings for their safe yields. However, the aggregate bond index. The US stock from Bloomberg has returned a negative 16% this year, its worst performance yet.
The problem: To fight inflation, the Federal Reserve has been raising interest rates at a record pace and keeps promising more in the future. That reduces the value of bonds issued when rates were lower.
Bond investors, Rieder acknowledges, have been hopeful before, only with gloomier inflation reports hurting their portfolios even more.
But now he sees clear signs that higher rates are beginning to have the desired effect of slowing the economy. That means it’s
The Fed may not need to raise rates much more than it is already projecting.
The good news for investors is that lower bond prices mean higher or better future yields. It’s it is true for old bonds that have fallen below face value and new bonds issued at higher interest rates.
Given that prices are unlikely to continue falling as they have, “you can feel pretty good about buying triple-A assets with these kinds of performances,” says Rieder.
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