Is he just talking his book lower so he can buy?
He is right that stocks will 'crack', however. Those old enough to recall the 1987 crash may remember that one of the possible catalysts for the crash was when James Baker, the treasury secretary, while in Germany expressed the need for a cheaper dollar...the Treasury today has been mostly silent or dismissive when discussing the dollar - if this changes, there would be good cause to look out below!
Grantham Says Fed Asset Purchases May Make Stocks 'Dangerously Overpriced'
From Bloomberg News:
Jeremy Grantham, chief investment strategist at Grantham Mayo Van Otterloo & Co., said the Federal Reserve’s attempt to boost the economy could push U.S. stocks to a level where they will be “dangerously overpriced.”
The Fed’s decision to purchase Treasuries and flood markets with cheap money will drive investors out of cash and encourage them to speculate in stocks, which are already overvalued, Grantham, 72, said today in an interview with the CNBC cable television network. He put the fair value of theStandard & Poor’s 500 at 900. The index closed yesterday at 1218.71.
“The S&P is already overpriced and if you push it up another 20 percent it becomes dangerously overpriced,” Grantham said in the interview. “In the not-too-distant future stocks will crack again.”
Grantham accurately predicted in 2000 that U.S. stocks would lose money in the coming decade. The S&P 500 lost an average of 1 percent a year in the 10 years ended Dec. 31, 2009.
Boston-based Grantham Mayo managed more than $94 billion as of June 30, according to the company’s website.
