Comments on: THE FEARFUL, SPECULATIVE MARKET http://pragcap.com/the-fearful-speculative-market Sun, 12 Feb 2012 06:49:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Rob http://pragcap.com/the-fearful-speculative-market/comment-page-1#comment-22233 Rob Wed, 21 Jul 2010 00:31:37 +0000 http://pragcap.com/?p=24032#comment-22233 I would say Grantham is still "optimistic" regarding the reflation continuing on for a while before the next big crash. (He does NOT think it is a good thing). His odds are down to 45% from the 50% he gave in his "Race to new highs" piece in April so he really hasn't shifted that much. His timeframe is by the end of next year and he speculates that the market might reach only 1400. (Back in April he feared the the market might completely lose its senses and rise to 1500-1600) before collapsing once again. He was spot on in April 2009 when he expected a rally (last hurrah) to about 1100 by year-end 2009 or early 2010. He simply became more and more impressed by the nature of the rally and the power of free money to power asset markets even in the face of weak fundimentals. Bears have been badly burnt in this rally. I would say Grantham is still “optimistic” regarding the reflation continuing on for a while before the next big crash. (He does NOT think it is a good thing). His odds are down to 45% from the 50% he gave in his “Race to new highs” piece in April so he really hasn’t shifted that much. His timeframe is by the end of next year and he speculates that the market might reach only 1400. (Back in April he feared the the market might completely lose its senses and rise to 1500-1600) before collapsing once again.

He was spot on in April 2009 when he expected a rally (last hurrah) to about 1100 by year-end 2009 or early 2010. He simply became more and more impressed by the nature of the rally and the power of free money to power asset markets even in the face of weak fundimentals.

Bears have been badly burnt in this rally.

]]> By: BK http://pragcap.com/the-fearful-speculative-market/comment-page-1#comment-22139 BK Tue, 20 Jul 2010 08:30:28 +0000 http://pragcap.com/?p=24032#comment-22139 This and Hussman should be read in conjunction I think. There is no doubt in my mind whatsoever that stocks are expensive, but placing odds on the market going to further levels of overvaluation as per Grantham's thesis (ie; 45% probablility) is even more of a speculation than speculating on the market itself! If the market is overvalued, the market will work it out over a longer time frame. Placing %'s on such outcomes has left me feeling quite confused. Am I missing something here? This and Hussman should be read in conjunction I think.

There is no doubt in my mind whatsoever that stocks are expensive, but placing odds on the market going to further levels of overvaluation as per Grantham’s thesis (ie; 45% probablility) is even more of a speculation than speculating on the market itself!

If the market is overvalued, the market will work it out over a longer time frame. Placing %’s on such outcomes has left me feeling quite confused. Am I missing something here?

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