Billionaire investing legend Jeremy Grantham is issuing a dire warning about US stocks as he believes stock prices could witness a massive collapse similar to the dot-com bubble.
In a CNBC interview, Grantham warns that stock market valuations are now comparable to those of the dotcom bubble of the early 2000s.
According to the billionaire investor, his statistics show that stocks are extremely overvalued.
“In a very real sense, I’m not sure there is anything comparable, but the 2000 tech bubble would be the closest. In terms of the ways in which the value systems are most predictive, based on the value of the stock market compared to GDP with adjustments, this is the most expensive market in American history.”
Although Grantham says the collapse is very difficult to time, he notes it could happen as early as 2028.
“My guess is somewhere between two weeks ago, two weeks from now, two months, two quarters, and possibly two years; the timing is always terribly uncertain. The market will peak and fall back into trend. And getting back into trend from here is closer to a 70% drop than a 50% drop.”
He also reminds investors that the NASDAQ fell more than 80% during the dotcom bubble.
“Keep in mind that in our quarterly letters we said a 75% decline for the NASDAQ in 2000, and it fell 82%.”
At the time of writing, the NASDAQ is valued at 29,839. A 70% collapse could see the price drop below 9,000.
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