Jeremy Grantham: prediction

Transcript context

…But I think you also say there might be three or four previous bubbles in history as big as this one. So, if we have three or four data points, why should we be very confident that right now is such a superbubble? What’s the magic elixir that you’re drawing from? Is it just three or four data points? Or do you know something, in theory, that other people don’t? No, this is precisely the point. There are not many data points, and you have to live with that. You can make the assumption that you would need 30 before you could do any sensible prediction. I believe that markets are a function of human behavior. I believe that human behavior has these flashpoints. That is normally quite reasonable. We’re relatively efficient, and stock prices are close enough for government work to what they should be. Then once in a blue moon, circumstances conspire to get us into an irrational fever. It takes an extended number of good economic years, extended profit margins at or close to a peak, nearly perfect economic conditions, and it takes a slow, steady build-up of euphoria. Then it hits a flashpoint, where people start to buy stocks without any regard to the fundamentals, as we’ve seen in the meme stocks recently. They buy them because they think someone else may pay more. These are pretty rare events, and we’ve had three, and they have some unique characteristics in common with each other and in common with nothing else. Now we’re in number four. That impresses the pants off me, I can tell you. I think the fourth one is so similar to the other three, and the outcomes from the other three are so unique and interesting, that I am willing to bet that this one is going to be the same or similar. Here’s a very direct question. If spotting bubbles is relatively feasible, why aren’t you much richer than you are, noting that you’re already quite well-to-do?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.