Salient to Investors:

Jeremy Grantham at Grantham Mayo Van Otterloo said:

  • All global asset prices are too high because of Federal expansive monetary policy.
  • US companies, other than quality stocks with stable earnings and low debt, and most global growth equities, are brutally overpriced. US large-caps, excluding quality stocks, will lose 0.8 percent per year for the next 7 years, adjusted for inflation.
  • Emerging-market stocks, Japanese stocks and European stocks are only a little expensive.
  • Bernanke and Greenspan have created asset bubbles by holding interest rates at artificially low levels.
  • The Fed is trying to badger people into making riskier investments in order to push up equity prices – a typical strategy of the Greenspan-Bernanke era. This can drive up asset prices for a time, but will ultimately result in exciting crashes.
  • Avoid fixed income – US bonds will lose 1.6 percent annually.

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