Risky assets are going to continue to outperform, but bulls are “living on borrowed time,” according to Jeremy Gratham. The title of his new letter is called “Pavlovs Bulled”
Grantham says that by October 1, investors should be “think much more conservatively,” about their positions.
If you’re an emerging market investor, you have much more to worry about.
From Grantham’s latest letter:
To make money in emerging markets from this point, animal spirits have to stay strong and not much can go wrong. This is possibly the last chapter in a 12-year love affair. Emerging equities seem to be in the early stages of the “Emerging, Emerging Bubble” that, 31⁄2 years ago, I suggested would occur. How far a bubble expands is always anyone’s guess, but from now on, we must be more careful.
And the big downside risk out there:
What to watch out for: commodity price rises in the next few months could be so large that governmental policies in emerging countries might just stop the global equity bull market. My guess, though, is that this is not the case in the U.S. just yet.
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