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Jeremy Grantham's GMO says stocks are overvalued by every metric, but there are 3 strategies investors can use to weather a crash

Jeremy Grantham's GMO says stocks are overvalued by every metric, but there are 3 strategies investors can use to weather a crash

Jeremy Grantham cofounded the asset management firm GMO.
Boston Globe/Getty Images




Stocks worldwide are expensive and US stock valuations are at concerning levels, Jeremy Grantham's firm.




GMO defended its view from bears on social media who are frustrated by the firm's negative outook.




GMO sees negative returns for 10 of 11 asset classes over the next seven years.




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Billionaire Jeremy Grantham's investment firm says stocks are too pricey, outlining their view as US equities sit at record highs, with the team offering their advice on how to navigate through what they call a global growth bubble. "Global equity markets rallied impressively in the quarter, pushing some year-to-date numbers into double-digit territory only halfway through the calendar year," said GMO in its second-quarter outlook published this week. Grantham, co-founder of investment firm Grantham, Mayo, van Otterloo & Co., is a legendary investor who is well known for calling for a burst of the 1989 Japanese asset-price bubble, the 2000 tech bubble, and the 2008 real-estate bubble."It gives us no pleasure to remind our clients that U.S. stock valuations, by almost any backward or forward-looking measure that we've come up with, are at levels that concern us," said GMO's asset allocation team. "If one must own U.S. stocks, however, as many institutions and advisors do, we suggest leaning into value and cyclicals while maintaining a quality bias." The S&P 500 index on Friday pushed its year-to-date advance to about 17%, overcoming a selloff this week. The benchmark has recently made a lengthy string of record highs fueled by expectations of strong corporate earnings expansion although investors have run into economic growth concerns as COVID-19 cases continue to mount worldwide.
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