Mr Grantham

Mr Grantham says the folly of bubbles decline to and remain below trend.

Historic examples replete with chicanery that liberated 150 million from consanguinous funds for the promise of a pill for Covid with neither a molecule nor a proven delivery system through the gastric tract are possible in bubbles.

Japanese rice to the South China Sea of 5 centuries ago bubbles burst with the flames confined to local exchanges not connected at the speed of light today that promises to share the fast twich pain in underfunded retirement accounts.

Mr Grantham has a trend target for the SP 500. 2500. With prices to remain below trend for a decade.

He reminds that the Greenspan put saved Amazon in 2000 which declined 90% to extinction level or twice the decline of the index until the Fed coursed money into the bilge of the titanic.

The Greenspan put was funded by a Fed that could comfortably apply ink to specie. 22 years later the inkwell is dry and the specie is being returned to coffers.

The cost of government money is under the rate of inflation and 4.5% below where it should be.

A dollar of earnings at 2% may well be worth a risk of 50 times or one divided by the rate of interest. A dollar of earnings at 5% would be worth a risk of 20 times or 60% lower squarely to Mr Granthams number with the presumption that there are in fact earnings.

Then there is Japan tethered to a 42 year denial from nikkei 40 000 in 1985 and beans counted by discretion to the 25 000 of today. To maintain the dignity of the enterprise the Japanese Government now owns 70% of its equity market with housewives and the government pension fund holding the balance. There appears not to be a bag holder but a passing of the bag until the deck chairs are re arranged on the battleships the Japanese do not have today.

In the 90s volatility was captured by the suicide index for Japanese executives. Sepuku being the honor. In 2020 a larcenous foreign CEO was spirited out of Japan in a tuba box which may well be worth more than the value of the index.

Select any equity index, cut it in half, set the bid, and thank Mr Grantham.