Grantham: This is a bubble, this is serious

Jeremy Grantham is famous for his ability to pick bubbles. The co-founder and Long-Term Investment Strategist at GMO Investment and Asset Management correctly called the Japanese equity bubble in the late 80s, and the tech bubble in the late 90s and early 2000s. All through 2007, he warned investors of the bubble, telling investors in a September ’07 article for Fortune Magazine:

As wonderfully favorable factors cool off, asset prices will be under broad pressure, and risky assets will be under extreme pressure. If the credit crisis gets out of control, this will happen quickly and painfully. - Jeremy Grantham, September 2007

But Grantham is no permabear. In March ’09, when many investors capitulated, he wrote ‘Reinvesting when terrified’, telling investors that it was time to start putting cash to work, as equities were greatly undervalued.

We now believe the S&P is worth 900 at fair value or 30% above today’s price. Global equities are even cheaper. - Jeremy Grantham, March 2009

In an exclusive interview that runs for nearly two hours, Grantham explains why he believes we’re in the late stages of another great bubble and his expectations for when it will come unraveled. He also explains why others fail to act in the face of bubbles, and we discuss some of the assets best placed to weather the storm.