Will the Market Crash?
Hi MM Team! Your thoughts on Jeremy Grantham's comments about a market crash being imminent in SMH Jan 21st 2022? Thanks Kim
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Answer
Hi Kim,
The crux of the article was – “The “Goldilocks” period of the past 25 years is ending, and the world needs to prepare for a future of inflation, slower growth and labour shortages, the renowned value investor told Bloomberg.” and ““There’s only a certain amount of cheap oil, cheap nickel, cheap copper, and we are beginning to hit some of those boundaries,”
I have heard numerous “crash” predictions over the last few decades with many coming from Jeremy Grantham himself – at some point he’ll be right although none forecast COVID and very few actually called the GFC, we’re happy with our outlook for 2022 and moving forward:
- 2022/23 will be a tougher year for markets as interest rates normalise but quality businesses / stocks will still perform, look at the 1987 crash on the attached Dow Jones chart, its hard to see – its the time to buy great companies into aggressive selling.
- With regard to his comments around commodities, MM believes we have seen the initial leg up in a new “Super Cycle” which will ultimately see huge rallies in the price of many commodities which is good news for the Australian Resources Sector.
Remain flexible and open-minded and there’s arguably never been a more exciting time for stock investors who have a long-term time horizon as opposed to “punters” who will probably need nerves of steel!
