Expert investor James Stack warned of rampant market speculation, predicted inflation, and blasted the Fed in a recent interview. Here are the 8 best quotes

James Stack
James Stack.

  • James Stack called out massive speculation in stocks, real estate, crypto, and other markets.
  • The investor said Federal Reserve policies are fueling reckless behavior on Wall Street.
  • Stack drew parallels between the current market boom and the dot-com and housing bubbles.
  • See more stories on Insider’s business page.

James Stack warned of rampant speculation across multiple markets, rang the inflation alarm, and urged investors to be careful in a recent MarketWatch interview.

Stack is the founder and CEO of Stack Financial Management, as well as the publisher of the InvesTech Research newsletter. He compared the Federal Reserve’s stimulus efforts to spiking Wall Street’s punchbowl, cautioned houses are more overpriced now than during the mid-2000s housing bubble, and likened the hype around SPACs and NFTs to the dot-com boom.

Stack’s firm takes a “safety-first” approach to investing, paying close attention to market risk and historical trends. It boasted a $1.2 billion stock portfolio at the end of March, which included a $97 million stake in Microsoft, and roughly $50 million stakes in each of Accenture, Cisco, and Walmart.

Here are Stack’s 8 best quotes from the interview, lightly edited and condensed for clarity:

1. “The Fed brought the punchbowl back to the party and, particularly when the pandemic hit, they decided to add more and more alcohol to it. There’s a lot of participants on Wall Street investing like they’re a little bit inebriated.” – describing the impact of the Federal Reserve’s expansionary policies since 2019.

2. “We have more of an upside disparity between housing prices and long-term inflation than we did in the housing bubble in 2005.” – Stack Financial’s housing barometer estimates US house prices are 43% above the long-term inflation trend, exceeding their 35% premium in 2005.

3. “Speculative psychology tends to spill over into multiple asset classes. Stocks are very, very expensive by most historical measures, but we’re also seeing it in real estate, we’ve seen it in cryptocurrencies – bitcoin shot up to $60,000 and now is struggling to stay above $30,000.”

4. “Our housing prices have gone ballistic. It seems that everyone’s quitting their job to become a realtor. It brings back all the memories of 2005-2006.” – describing the local housing market in Flathead Valley, Montana.

5. “Speculative excess is spilling over into all of the new IPOs, the SPACs. We’re raising money and we don’t know what we’re going to do with it. Then we’ve got the new NFTs, digital art – it’s so extreme, it’s almost nonsensical. But it’s not unusual. We saw it in the late 1990s, when companies could go public that had never made a penny. We’re starting to see a lot of that today in the meme stocks favored by new, young traders.”

6. “The bubble is invisible to those inside the bubble. Don’t go to someone investing in NFTs and try to tell them that they’re speculating in a bubble that could be almost worthless. You’re going to get in an argument that you can’t win except in the aftermath.”

7. “We are in one of the most overvalued markets in history and one of the most speculative-excess periods in history, so you don’t have to be fully invested today. If you’re going to invest in today’s market, don’t go out buying the SPACs, or the stocks that have infinite PE ratios, because they have yet to make earnings. I would put higher allocations into those sectors that are going to benefit from, or at least be resilient to, increasing inflation.”

8. “When the Fed does decide to start taking the punchbowl away, growth stocks are where the pains could be felt the greatest. Think ‘safety first,’ walk softly, and carry a comfortable cash reserve.”

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‘Big Short’ investor Michael Burry is back on Twitter – and warning of the biggest market bubble in history

Michael Burry big short
Michael Burry.

Michael Burry on Tuesday warned of the biggest market bubble in history, suggesting that his concerns about rampant speculation only grew during his 10-week hiatus from Twitter.

“People always ask me what is going on in the markets,” the investor tweeted. “It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360.”

The hashtag was likely a reference to a famous saying in investing: “Bulls make money, bears make money, but pigs get slaughtered.” Burry has repeatedly told investors that they’re being too greedy, speculating wildly, shouldering too much risk, and chasing unrealistic returns.

The Scion Asset Management chief deleted his Twitter profile in early April after sounding the alarm on Tesla stock – which he’s short – as well as GameStop, bitcoin, dogecoin, Robinhood, SPACs, inflation, and the broader stock market. He resumed tweeting on Monday.

Read more: These 5 stocks are prime candidates for an explosive AMC-style short squeeze right now, according to data from Fintel

Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s, which was immortalized in the book and the movie “The Big Short.” He also helped lay the groundwork for GameStop’s comeback this year, as he bought a stake in the video-game retailer in 2019 and wrote several letters to its board.

The investor, who has complained many times about his warnings being ignored, has “Cassandra” as his display name on Twitter, a reference to the priestess from Greek mythology who was cursed by the gods to share true prophecies but never to be believed.

Burry’s latest tweet echoed his other cautions. For example, he’s compared the hype around bitcoin, electric vehicles, and meme stocks to the dot-com and housing bubbles and said earlier this year that the stock market was “dancing on a knife’s edge.”

Read the original article on Business Insider

Warren Buffett slammed SPACs and Robinhood for encouraging gambling on stocks at Berkshire Hathaway’s annual meeting

warren buffett
Warren Buffett.

  • Warren Buffett criticized SPACs and Robinhood at Berkshire Hathaway’s annual meeting.
  • The investor said they encourage gambling and treating the stock market like a casino.
  • Charlie Munger, Buffett’s right-hand man, damned both trends as well.
  • See more stories on Insider’s business page.

Warren Buffett blasted special-purpose acquisition companies (SPACs) and the Robinhood trading app for encouraging gambling on stocks at Berkshire Hathaway’s annual meeting on Saturday.

The famed investor and Berkshire CEO said that SPACs, also known as blank-check companies, were taking advantage of amateur investors and making unrealistic promises. “You stick a famous name on it and you can sell almost anything,” he said.

Buffett’s right-hand man, Charlie Munger, said that the proliferation of SPACs was a “moral failing” to an extent.

“The easy money made by SPACs and derivatives and so on – you push that to excess, it causes horrible problems for the civilization.”

Buffett bemoaned the fact that Wall Street profits most when markets are rife with speculation.

“You have this incredible, huge asset to humanity but it really makes its money when people are doing stupid things,” he said.

Buffett said that a rising number of people are treating the stock market like a casino, and reiterated his analogy that day traders and speculators are like Cinderella at the ball.

“More people are entering the casino than are leaving everyday,” he said. “It creates its own reality for a while, and nobody tells you when the clock will strike 12 and it all turns to pumpkins and mice.”

Buffett also shared his thoughts on Robinhood, which many amateur investors and day traders have flocked to in recent months.

“It’s become a very significant part of the casino group that has joined to the stock market” over the past 12 to 18 months, Buffett said.

The investor doesn’t see buying and selling put and call options – leveraged bets on whether stocks and other assets will rise or fall in value over a period of time – as illegal or immoral. “But I don’t think you build a society around people doing it,” he said.

Munger went further in criticizing Robinhood and other trading apps for enabling speculation.

“It’s not just stupid, it’s shameful,” he said. “It’s deeply wrong.”

A Robinhood spokesperson provided the following statement to Insider:

“There is an old guard that doesn’t want average Americans to have a seat at the Wall Street table so they will resort to insults. The future is diverse, more educated, and propelled by engaging technologies that have the power to equalize.

“Adversaries of this future and of change are usually those who’ve enjoyed plentiful privileges in the past and who don’t want these privileges disrupted. Their criticisms are unfortunate but they prove why Robinhood’s mission is in fact critical.

“The new generation of investors aren’t a ‘casino group.’ They are tearing down old barriers to investing and taking control of their financial futures. Robinhood is on the right side of history.”

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Billionaire Mark Cuban highlights rampant speculation in crypto – but says that’s always the case with transformative technologies

Mark Cuban
Mark Cuban.

  • Mark Cuban acknowledged there’s rampant speculation in cryptocurrencies.
  • The billionaire investor said revolutionary technologies often generate hype.
  • Cuban defended the boom by pointing to the growing number of uses for crypto.
  • See more stories on Insider’s business page.

Mark Cuban recognizes lots of people are buying cryptocurrencies, not because they view them as fundamentally valuable, but because they expect others to buy them and drive their prices higher.

“Yes there is massive speculation,” the billionaire “Shark Tank” investor and Dallas Mavericks owner tweeted on Wednesday. However, he argued plenty of transformative technologies sparked feverish excitement as they took off.

“Every single one of the technologies has been dismissed by legacy institutions,” he continued. “Until they weren’t.”

Cuban made those comments in a Twitter thread defending crypto as a revolutionary innovation. He was responding to criticism that his aggressive promotion of dogecoin, a “meme coin” that was created as a joke, would result in buyers losing a bunch of money.

The technology entrepreneur – who became a billionaire by selling his internet-radio startup, Broadcast.com, to Yahoo in 1999 – has been one of dogecoin’s biggest promoters. He went on “The Ellen DeGeneres Show” this week to reiterate his view that the coin is a fun way to learn about crypto, and a better bet than a lottery ticket.

Cuban also highlighted the growing number of uses for crypto in his thread. He suggested non-fungible tokens (NFTs) for digital collectibles, smart contracts, and decentralized finance (DeFi) could fuel demand for digital currencies and underpin their prices in the future.

“If you look at crypto assets whether eth, doge, btc, mkr etc and only see something intangible for people to trade, you haven’t really looked,” he said, referring to ether, dogecoin, bitcoin, and dai. “If you see smart contracts and programming languages and think of new ways to disrupt industries then I’m saying there’s a chance.”

Unsurprisingly, dogecoin has its fair share of critics. Michael Burry of “The Big Short” fame dismissed it as a “doge’s breakfast” and one of several market bubbles, while billionaire investor and bitcoin bull Mike Novogratz warned against buying it and described it as a “dog.”

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Market prophet Gary Shilling predicts stocks and cryptocurrencies will crash, blasts the Fed, and warns against speculating in a new interview. Here are the 10 best quotes.

gary shilling
Gary Shilling.

  • Gary Shilling said stocks and cryptocurrencies are overheated and bound to crash.
  • The veteran forecaster blamed stimulus measures for ballooning asset prices.
  • Shilling dismissed inflation fears and advised investors to resist speculating.
  • See more stories on Insider’s business page.

Gary Shilling warned of rampant speculation in stocks and cryptocurrencies, and predicted a painful end for those involved, in a RealVision interview released this week.

The president of A. Gary Shilling & Co – who has called several previous crashes – also accused the Federal Reserve and Treasury of pumping up asset prices, dismissed fears of higher inflation, and urged investors to resist joining the buying frenzy.

Here are Shilling’s 10 best quotes, lightly edited and condensed for clarity:

1. “The consensus view is that the economy is going to open very rapidly, inflation is going to come roaring back, and interest rates are going through the roof. That is way overdone. We are in a low-inflation, if not deflationary era.” – highlighting that China and other countries produce more than they consume, fueling a global supply glut that depresses prices.

2. “The money pumped out by the Fed and all the fiscal stimulus hasn’t gone into spending, it’s gone into savings and asset inflation. It’s really responsible for things like dogecoin and bitcoin and other cryptocurrencies, and all these speculations. It’s pushed stocks to unbelievable highs in relation to earnings, in relation to anything else, and made them very overpriced. Now, that doesn’t mean that I want to be short stocks right now, because with speculations, you never know how far they’re going to go. They leave the realm of any fundamentals, they’re off in the wild blue yonder.”

3. “There’s too much money floating around, and people don’t know what else to do with it. The Federal Reserve can’t be oblivious to what they’re doing. I know that they’re very honest public servants, but you’d almost think that these guys have a vested interest in pushing up stocks and fostering speculation. At some point, you would think that they’ve got to exercise more caution.”

4. “Until somebody blows the whistle, and that normally is the Fed, there’s no real end to this speculative climate. It just gets more and more extreme. It’s like the sock-puppet thing we saw back in the dot-com era. Absolutely no logic to the thing, but everybody’s having a wonderful time as long as it lasts.”

5. “If things start to unfold as we expect, and we get a big sell-off in equities that takes a lot of these speculations with it, we’ll have an opportunity to make some serious money.”

6. “When we got to the point that the only things that people wanted were gimmick cameras (Polaroid), motorhomes (Winnebago), and amusement parks (Disney), those are the outward flourishes, not the guts of the economy. People were rejecting the basic economy, saying there’s something wrong, or they’re into speculation. There are many similarities between then and now.” – comparing the current excitement around hot stocks with the hype that surrounded the “Nifty Fifty” stocks in the 1960s and 1970s.

7. “How could this end? One possibility is that we wake up tomorrow and find some major financial institution has bit the dust. We had this recently with Archegos, but we can have something like that on a larger scale that just touches off the collapse. You go back to the Tulipmania in Holland in the 1600s, the South Sea Bubble in England in the 1700s – they got to the point where there was a tiny trigger and wham, they all collapsed.”

8. “I’m not making any firm prediction as to when this thing is going to collapse. Speculations outrun any logic and that’s probably going to be true of this one. But at some point, boy, there’s going to be a lot of blood on the floor.”

9. “Back in the day, we all wore suits. I would buy two or three new suits a year, not because they went out of style, but because I wore them out. If that’s what commuting does to the suit, what’s it done to the guy inside the suit?” – predicting the pandemic will permanently alter work habits because many people have realized they dislike commuting.

10. “We had a wake-up call with the pandemic. It’s time to save money, to be cautious, and certainly investment-wise, to avoid speculation. It’s very hard when everybody is making money and you feel, ‘Oh, am I missing out? There’s this garage mechanic, who is no longer fixing cars because he’s making so much money in GameStop. I’m a stupid idiot, why aren’t I involved?’ Well, there are times where you really have to just pluck up your courage and say, ‘No, I don’t want to be involved.'”

Read the original article on Business Insider

Cryptocurrencies are attractive as a ‘small part’ of any portfolio, George Ball says

bitcoin
  • CEO of investment firmSanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

Read the original article on Business Insider

Cryptocurrencies are attractive as a ‘small part’ of any portfolio, former Prudential Financial chief says

bitcoin
  • Former Prudential Financial CEO and current CEO of Sanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Former Prudential Financial CEO George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The former Prudential Financial CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

Read the original article on Business Insider

Warren Buffett warned that ‘hot’ stocks fade, joked about his age, and celebrated America in his annual letter. Here are the 10 best quotes.

warren buffett
Warren Buffett.

  • Warren Buffett released his yearly letter to Berkshire Hathaway shareholders.
  • The investor warned that frenzies around fad stocks eventually fade.
  • Buffett also discussed bonds, trading fees, and America’s wealth generation.
  • Visit the Business section of Insider for more stories.

Warren Buffett described how hype around “hot” stocks can evaporate, reminded stock traders that their transaction fees fill Wall Street’s coffers, and celebrated American prosperity in his annual letter on Saturday.

The famed investor and Berkshire Hathaway CEO also joked about his age, bemoaned the outlook for bond investors, and admitted to overpaying for Precision Castparts in 2016.

Here are the best quotes from Buffett’s shareholder letter for 2020, lightly edited and condensed for clarity:

1. “Precision Castparts is far from my first error. But it’s a big one.”

2. “Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide. At a point, the soaring price of a promoted stock can itself become the ‘proof’ that an illusion is reality. Eventually, of course, the party ends, and many business ’emperors’ are found to have no clothes.”

3. “In contrast to the scoring system utilized in diving competitions, you are awarded no points in business endeavors for ‘degree of difficulty.’ Furthermore, as Ronald Reagan cautioned: ‘It’s said that hard work never killed anyone, but I say why take the chance?'”

4. “Bonds are not the place to be these days. Fixed-income investors worldwide – whether pension funds, insurance companies, or retirees – face a bleak future.”

5. “Since our country’s birth, individuals with an idea, ambition, and often just a pittance of capital have succeeded beyond their dreams by creating something new or by improving the customer’s experience with something old.”

6. “In its brief 232 years of existence, there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.”

7. “Mrs. B, it should be noted, worked daily until she was 103 – a ridiculously premature retirement age as judged by Charlie and me.” – joking about Rose Blumkin, who sold Nebraska Furniture Mart to Berkshire in 1983. Buffett is 90 and Charlie Munger, his business partner, is 97.

8. “At Berkshire, we have been serving hamburgers and Coke for 56 years. We cherish the clientele this fare has attracted.” – referring to investor Philip Fisher’s advice to public companies to be consistent in their actions and communications if they want to attract a certain kind of shareholder. Fisher compared it to restaurants serving either hamburgers and Coke or French cuisine with exotic wines, but not both.

9. “Investors and speculators in the United States and elsewhere have a wide variety of equity choices to fit their tastes. They will find CEOs and market gurus with enticing ideas. If they want price targets, managed earnings and ‘stories,’ they will not lack suitors. ‘Technicians’ will confidently instruct them as to what some wiggles on a chart portend for a stock’s next move. The calls for action will never stop.”

10. “Investors must never forget that their expenses are Wall Street’s income. And, unlike my monkey, Wall Streeters do not work for peanuts.” – Buffett said a monkey who picked 50 S&P 500 stocks to purchase by throwing darts at a board would make money, as long as it resisted making changes to its portfolio.

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Legendary investor Jeremy Grantham says the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham said the stock-market bubble would likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like the Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, the veteran investor Jeremy Grantham said on the “Invest Like the Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble would deflate, slammed SPACs, shared some of the insults he’d received for criticizing bitcoin, and predicted that electric vehicles would revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble; this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly, and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now, baby! Get aboard. You don’t understand. You dinosaurs don’t get it.’ Well, the trouble is we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time and then 20% of the time totally freak out one way or the other.”

Read more: The world’s top investment firms pay Rob Arnott for advice. He shares 2 investing ideas that could go down as ‘the trade of the 2020s’ as the world bounces back from COVID-19.

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure, and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7 years old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings or sales for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state-battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the effects of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are, if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

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Legendary investor Jeremy Grantham warns the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham warned the stock-market bubble will likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like The Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, veteran investor Jeremy Grantham warned on the “Invest Like The Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble will deflate, slammed SPACs, shared some of the insults he received for criticizing bitcoin, and predicted electric vehicles will revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble, this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice, and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now baby! Get aboard, you don’t understand. You dinosaurs don’t get it.’ Well, the trouble is, we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time, and then 20% of the time, totally freak out one way or the other.”

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7-years-old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings, or sales, for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am, with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the impacts of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

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