Stay away from US stocks, expect the AI ​​bubble to burst and brace for a recession, elite investor Jeremy said

Jeremy Grantham.Boston Globe/Getty Images

  • US stocks are grossly overvalued, a recession is coming and AI is overhyped, says Jeremy Grantham.

  • Without the AI ​​craze, shares would have fallen another 20 to 30 percent by 2023, the investor said.

  • Grantham said he worries about foreign wars, especially with asset prices at record highs.

Stocks are absurdly expensive and likely to struggle, artificial intelligence is a bubble destined to burst, and the economy will suffer a minor recession or worse, warns Jeremy Grantham.

The co-founder and long-term strategist of fund manager GMO recently recommended avoiding US stocks ThinkAdvisor interview. “They are almost ridiculously more expensive than the rest of the world,” he said.

“The stock market will have a tough year,” he continued. U.S. companies’ profit margins are at historic highs compared to foreign rivals, creating a “double jeopardy situation” for stocks in which both earnings and bottom lines could decline, he added.

Grantham, a market historian who raised the alarm on a multi-asset “super bubble” in early 2022, saying it burst that year when the S&P 500 plunged 19% and the tech-heavy Nasdaq Composite plunged 33%.

Stock prices would have fallen another 20 to 30%, he said, but the sell-off was “grossly interrupted” in early 2023 by the AI ​​frenzy that “changed the flight path of the entire stock market.”

The veteran investor said that “AI is not a hoax, like Bitcoin in fact is,” but predicted that the “incredible euphoria” surrounding it would not last long. Still, he suggested it could be as revolutionary as the Internet in the coming decades.

Grantham also gave gloomy forecasts for the US economy, despite solid GDP growth of 3.3%…

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