Billionaire investing legend Jeremy Grantham is issuing a dire warning on US equities, believing stock values could witness a massive collapse similar to the dot-com bubble.
In a CNBC interview, Grantham warns that the stock market valuations are now comparable to those seen during the dot-com bubble of the early 2000s.
According to the billionaire investor, his metrics show that equities are extremely overvalued.
“In a very real sense, I’m not sure there is a comparable, but the tech bubble of 2000 would come the closest. On the ways that the value systems are the most predictive, based on the value of the stock market compared to the GDP with modifications, this is the most expensive market in American history.”
While Grantham says the collapse is very difficult to time, he notes that it can happen by 2028.
“My guess is sometime between two weeks ago, two weeks from now, two months, two quarters, and conceivably two years; the timing is always terribly uncertain. The market’s going to peak out and drop back to trend. And getting back to trend from here is closer to a 70% decline than a 50% decline.”
He also reminds investors that during the dot-com bubble, the NASDAQ dropped by over 80%.
“Bear in mind, we said a 75% decline for the NASDAQ in 2000, in our quarterly letters, and it went down 82%.”
At time of writing, the NASDAQ is valued at 29,839. A 70% collapse could see it trading below 9,000.
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