Amazed at the Stock Market Bubble

18 Jun

Amazed at the Stock Market Bubble

We have reported to you recently about the Wall Street “smart money” buying gold.  Names like Dalio, Druckenmiller, Tudor Jones, Zell, Gundlach, Singer, Klarman, Einhorn, Mobius, Hendry, Zell…  See All the Smart Money is Buying Gold, and More About the Smart Money.

There are two more smart guys we want to mention.  We think it is important to share their views because they are both alarmed by what is going on in the stock market.

The first is Jeremy Grantham.  He’s the co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, a major asset management firm.  Grantham is best known for spotting speculative bubbles in the markets, including Japan’s stock market bubble in the 80s, the dot com bubble, and the housing bubble.

Grantham is “amazed” that the stock market could be so high.  That’s because the price/earnings ratio is in the top 10 percent in its history, while the underlying economy is in the worst 10 percent in its history.  The market and the economy have never been more disconnected, he says

Grantham calls it “one of the most impressive mismatches in history.”

“This will end badly,” says Grantham.  “it’s becoming the fourth real McCoy bubble of my career.”

There are a lot of other smart guys, but one of the smartest ones we know is David Stockman.  He was President Reagan’s budget director and a true financial whiz kid in his youth.  Now after a long career on Wall Street, he’s not only still smart, he’s also wise.    

David Stockman

Commenting on the current state of the economy and hopes for a recovery, Stockman says, “I think this will be a long, deep ‘L’ shaped bottom…. We went through a month in which 30 million people suddenly found themselves with no paycheck, in April, and the stock market had the best month in 52 years.”  

“Now what kind of sense does that make?”

We agree.  Not much.

“I do think we are near the end of the line of this whole phony Keynesian central banking regime,” says Stockman.  “Once confidence finally evaporates, there will be a massive stampede into real money.

Emphasis ours.  Real money.

We urge our friends and clients to avoid the stock market bubble, so clearly driven by Fed policies and not by economic growth and dynamism.

And we would like to help you beat the coming stampede into real money.  Contact Republic Monetary Exchange today and speak with one of our gold and silver specialists about protecting your family and your wealth.