Other than a few bloggers out there this is the first time I have heard my sentiments on this market echoed so closely. I think they do a great job in this piece, its a must read!
BOSTON (MarketWatch) — The good news: We’re still not in a bubble as big as the ones in 1999 or 2007.
The bad news: We’re getting close.
“I am deeply, deeply worried,” says James Montier, the highly regarded strategist at fund firm GMO and a rare contrarian. “This is the first officially government-sponsored market mania for a very long time.”
Assets aren’t as overvalued as they were in 2007, he says, but they’re in the ballpark. “We’re not completely priced for perfection, but we’re not far off. There’s no margin of safety left. [Former Fed chairman] William Martin once said that the job of the Federal Reserve was to take away the punch bowl just as the party gets going. But this time around, the Federal Reserve is spiking the punch bowl and handing out glasses. The hangover is going to be bad.”
Montier and I were having lunch in a seafood restaurant on Boston’s waterfront on a cold, wet, dismal day. Through the windows, a thick mist shrouded the harbor and the boats. Montier, who’s British, was over briefly from London and joked that the weather is more like back home. It was also gloomy enough for his message to investors.
I first came across Montier when I worked in London. He was at the investment bank Dresdner, and then with SG Securities. His published reports developed a cult following among value investors and contrarians in London’s financial world. As tumbling markets bore out his warnings, Montier’s star rose. Then Jeremy Grantham, a fellow Brit and the chairman of Boston’s GMO, took him in-house at GMO and now he publishes more rarely. We met up after his latest commentary, “The Seven Immutable Laws of Investing.”
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