저자: JeremyGrantham · 외국인
요약 보기
그랜덤은 2021년 버블이 디플레이션 국면으로 하락 중이며, 이익 감소와 경기침체가 내년까지 이어져 주가 하락을 동반할 수 있다고 본다. 연준의 경기침체 회피 판단은 과거 기록상 틀려왔다고 비판한다. 금리가 장기간 높게 유지되면 자산가격에 하방 압력이 된다고 주장한다. 미국 시장은 PE 23배로 과열이며, 해외 시장은 상대적으로 덜 비싸 글로벌 인덱스(미국 비중 축소)를 권고한다. 다만 S&P500 PE는 최근 30년 평균 수준이라 그의 판단이 틀릴 가능성도 언급된다.
다듬은 글
do you think we're in a major bubble now at right now in the United States, and do you think the tech bubble has burst sufficiently, so that the tech bubble burst is over?
Throughout his more than 50-year career, billionaire investor Jeremy Grantham has developed a reputation as something of a doomsday oracle. He is famous for predicting some of the biggest stock market crashes of all time, such as the dot-com crash in 2000, the financial crisis in 2008, and most recently the tech bubble in 2021. Here in 2024, the US stock market is once again bumping up against all-time highs, and Grantham has warned that the market is dangerously overvalued. Here is what he had to say.
You are well known in the investment world for saying that sometimes there are bubbles and that bubbles should be avoided. Do you think we're in a major bubble right now in the United States, and do you think the tech bubble has burst sufficiently, so that the tech bubble burst is over?
I think we are descending from the 2021 bubble, which was one of the great bubbles. This should normally be the deflationary period, the deflating period. It depends on whether earnings decline, whether profit margins decline, and whether the economy goes into recession. We will have a recession running perhaps deep into next year, with an accompanying decline in stock prices.
So the recession you're predicting probably won't happen in 2023, but it may start in 2023. The Federal Reserve recently said they think we've cleared the recession hurdle, and they don't really project a recession any longer. You disagree with the Fed on that?
Yes. I think the Fed's record on these things is wonderful, in that it's almost guaranteed to be wrong. They have never called a recession, and particularly not the ones following the great bubbles. They prided themselves on stimulating the bubbles and took credit for the beneficial effect of higher asset prices on the economy. They have never claimed credit for the deflationary effect of asset prices breaking, and they always do.
You said not too long ago that you weren't a big fan of Powell and the way he's been handling inflation. Is that correct?
Yes, that's correct. And you think he's done a better job recently in getting inflation under control?
I think it's largely out of his hands; the forces at work are bigger than him. I suspect inflation will never be as low on average as it was over the last 10 years. We have re-entered a period of moderately higher inflation and therefore moderately higher interest rates. In the end, life is simple: low rates push asset prices up, higher rates push asset prices down, and we're now in an era that will average higher rates than we had over the last 10 years.
The US stock market has soared over the last nearly 15 years. Take a look at this chart. It shows the performance of the S&P 500 index over the last couple of decades. For background, the S&P 500 is generally regarded as a proxy for the US stock market. We can see that the S&P has skyrocketed from roughly 1,000 in February 2009 to its current level of approximately 4,500. The last 14 years have been one of the best periods in the history of the stock market for investors. But the concern that Grantham and many others have is that the market has soared to unsustainably high levels.
One of the biggest drivers pushing the stock market toward bubble territory was historically low interest rates. Interest rates in the US spent the better part of the last 15 years near 0%, and these low rates acted like jet fuel for the stock market. To truly appreciate Grantham's comments, you first have to understand the relationship between interest rates and asset values. Asset values are just a fancy way of saying things people own because they produce income for them. Think of stocks, bonds, and real estate as the most common types of assets in the average investor's portfolio. The value of any asset, including stocks, is based on the cash it will generate for you as the owner, discounted back to the present day using an interest rate. At first this may sound complicated, but it's actually a relatively straightforward concept.
Let's say you buy a stock that produces $30 a year in cash for 10 years. At the end of the 10 years, you can sell the stock for $300. You know how much cash the stock will produce for you as the owner, but there's one last step in finding how much that stock is worth today: you have to discount those cash flows back to the present day using an interest rate. The reason is that a dollar today is not worth the same as a dollar 10 years from now. Let me ask you a question to demonstrate this point. If you had to choose between receiving $10,000 today or $10,000 ten years from now, which would you pick? Obviously you would want the money today. In investing this is called the time value of money.
For the sake of this example, I'll start with a 20% interest rate, which gives a stock price of $174 per share. To show exactly what I mean when I say lower interest rates are jet fuel for stock prices, let's see what happens when we decrease the rate. Bringing it down to 15% gives a new stock price of $225. Bringing it down further to 10%, the stock price soars to $300. At 6%, the stock continues to skyrocket, hitting $388 per share. Notice that the amount of cash the stock produces stays the same. The only thing that changed was the interest rate. The declining interest rate was powerful enough to push the stock price from $174 at a 20% rate to $388 at a 6% rate. That is an increase in the value of the stock of a whopping 123%, and the stock didn't make a single additional dollar of cash flow. Now you can see why low interest rates can push stock prices to mind-boggling levels.
While this example shows how low interest rates can contribute to a bubble, there is also a decidedly human element. Listen to Grantham explain. They were likely to go into a recession, probably next year, though it could start this year. The tech bubble burst that we saw beginning, let's say, last year has not yet completely played itself out, and we have a little mini bubble in artificial intelligence. There were very big moves in a dozen very big stocks, but it's not affecting the overall economy as much as the whole tech sector did. That's right. In comparison to 2021 and 1929, it's not as severe.
So what is it about human nature that makes people want to participate in a bubble? They see the stock market going up and they think they're going to miss something. Even the famous Sir Isaac Newton participated in a bubble. He thought he was missing something. He mortgaged his house and put all his money into the South Sea Company and lost it all. So even somebody as smart as that was unable to resist the bubble. Why can't humans resist being in bubbles? I always like to say there's nothing more supremely irritating than watching your neighbors get rich. It is just irresistible to try to join in. When enough people hit the inflation point, it sucks in everybody. The great bubbles are the ones that are interesting. Mostly there's a nice balance between bulls and bears, and once in a blue moon, about every 20 years, you hit an inflation point where enough people become bullish that they stop thinking about fundamentals.
Bubbles form in large part due to FOMO, or fear of missing out. As people see their neighbors getting rich, they want a piece of the action. This dynamic has existed as long as financial markets have existed. J.P. Morgan, better known as the founder of what is now the JP Morgan Chase banking empire, was one of the most powerful bankers and industrialists at the turn of the 20th century. He saw frequent booms and subsequent busts, all too common in the early days of the stock market, which prompted him to utter the now infamous line: "Nothing so undermines your financial judgment as the sight of your neighbor getting rich." Even the brightest minds of all time can fall victim to the prospect of easy money. The epitome of this is Isaac Newton and the story of the South Sea Bubble.
For those who may not know, Newton is universally regarded as one of the greatest scientific minds ever. He invented the theory of gravity, and he also invented calculus and the three laws of motion on which all mechanics is based. Despite all that intelligence and accomplishment, Newton still lost it all in a financial bubble. In 1711 Newton invested a substantial portion of his wealth in the South Sea Company, the British trading company established to reduce the national debt and exploit lucrative trade opportunities in the South Seas. It was the talk of the town, promising unimaginable riches to its investors. Newton's involvement was initially profitable, and he reaped significant gains as the company's stock soared to dizzying heights. Letting greed get the best of him, Newton mortgaged his house to go all in on the stock. However, the speculative frenzy reached unsustainable levels. In 1720 the bubble finally burst, sending South Sea Company stock plummeting in what is now considered one of the most infamous financial crashes in history. Newton's incredible intellect couldn't shield him from the consequences. He famously remarked, "I can calculate the motion of heavenly bodies but not the madness of people." In the aftermath, Newton's investments became nearly worthless and he suffered substantial losses. While his contributions to science remain unparalleled, his involvement in the South Sea Bubble is a reminder of the unpredictability and irrationality of financial markets, which affect even the most brilliant minds of their time. If Isaac Newton wasn't smart enough to avoid a bubble, who are we to think we can navigate it?
Thankfully for us, Grantham has some advice on what to do now, in 2024. So if I said to you, "Look, I'm not that wealthy, I have $100,000, and I'd like to put it somewhere where I'm not going to lose it. What would you recommend? Just an index fund or something else?"
No, I think a global index fund that had most of its money outside the US, and if they were up to it, I would say only invest outside the US for the time being. This overpricing in the market is mainly a US event. The markets outside the US are not particularly overpriced. According to Grantham, the stock market bubble is concentrated in the US for the most part.
One way to get a sense of where valuations in the stock market stand is the price-to-earnings ratio, or PER for short. Think of a PER as the price you must pay per unit of current earnings. If a stock is trading for $30 and produces $1 per share of earnings, the PER is 30. Put another way, you have to pay $30 for each dollar of current earnings the stock produces. As a general rule of thumb, the higher the PER, the more expensive a stock is, and the lower the ratio, the cheaper it is. Just like individual stocks, entire country stock markets can have PERs.
Let's look at PERs for countries around the world to see whether Grantham is correct that the US stock market is overvalued. As of the making of this video, the US stock market trades at a PER of 23. This is one of the highest in the world. The only country with a significantly higher PER is India, at nearly 25. Australia trades at about 20. France trades at roughly 18. Canada is closer to 17. Japan is about 16. Germany trades at 13, and the United Kingdom is at nearly 13. Italy is at 10, China is at nearly 9, and Brazil is at just 8.
The big difference between the US PER and these other large countries seems to support Grantham's argument that the US stock market is overvalued. However, this only tells part of the story. The US stock market contains many of the world's largest and most profitable companies, and investors around the world put substantial sums into US companies, pushing prices up even further. It is also important to see how the US stock market's PER compares to its own history. Using the S&P 500 as a proxy, we can see it trades at a PER comparable to the levels it has traded at for the last 30 years. It's plausible that Grantham is wrong and the US stock market stays at these levels for years to come.
So there you have it. Make sure to like this video and subscribe to the channel. It helps a lot.
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