Grantham Says Sell U.S. Stocks to Avoid Unprecedented Bubble

(Bloomberg) -- Jeremy Grantham said the U.S. stock market is in a bubble and investing in it is “simply playing with fire.”

“I have been completely amazed,” the veteran bearish investor said in an interview Wednesday on CNBC. “It is a rally without precedent -- the fastest in this time ever and the only one in the history books that takes place against a background of undeniable economic problems.”

Individual investors jumping into the market now should sell U.S. stocks, buy emerging market equities and “throw the key away” for a few years, he said, adding “this is becoming the fourth real McCoy bubble of my career.”

The S&P 500 index has jumped almost 40% from its March 23 low even as the coronavirus pandemic has damaged almost every sector of the economy and put millions of people out of work.

Grantham said events like firms trying to sell stock in bankrupt companies should make “any bear feel better.”

Grantham also said it’s difficult to imagine when the broad economy will completely recover from the effects of the pandemic.

Earlier this month, Grantham’s firm, GMO, slashed its exposure to equities. The firm said it reduced the net equity exposure in its Benchmark-Free Allocation Strategy to 25% from around 55%.

GMO managed about $60 billion as of the end of February.

©2020 Bloomberg L.P.