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Gilead Sciences Inc. Message Board

  • gadder007 gadder007 Jul 18, 2014 5:06 PM Flag

    GMO'S Jeremy Grantham Doesn't See a Bubble Just Yet

    Not specific to Gilead, one of my largest investment, but about that the market in general. According to Graham we have a few hundred point to go on the S&P to get to the bubble territory...

    GMO'S Jeremy Grantham Doesn't See a Bubble Just Yet
    The famed investor says the economy's "early-cycle look" is best reason why a big stock decline is not imminent.
    Updated July 18, 2014 4:50 p.m. ET
    Editor's Note: Grantham is founder of GMO, a Boston-based money manager. This is an excerpt of his latest quarterly market commentary. The full version of this piece, is available on the GMO Website.

    Despite a shocking 2.9% setback in first quarter GDP (quarterly decline at annualized rate), the extent of which was forecast by no one, and despite a substantial decline in NIPA corporate earnings, the market has climbed slowly but steadily in recent months. Market volatility has declined to very low levels despite these setbacks and despite Middle Eastern problems.

    (The negative January Rule this year has, for that matter, also been ineffective so far.) So, all is apparently well, as we have arrived within three months of the dreaded (by bears) presidential third year. Accordingly, my recent forecast of a fully-fledged bubble, our definition of which requires at least 2250 on the S&P, remains in effect.
    In early July, Janet Yellen made an admirably clear statement that she is sticking faithfully to the Greenspan-Bernanke policy of extreme moral hazard. She will not use interest rates to head off or curtail any asset bubbles encouraged by the extremely low rates that might appear. And history is clear: very low rates absolutely will encourage extreme speculation. But Yellen will, as Greenspan and Bernanke before her, attempt to limit only the damage any breaking bubbles might cause. Well, it is a clear policy and in my opinion clearly wrong. I had thought that central bankers by now, after so much unnecessary pain, might have begun to

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