i watch a lot of interviews and every once while i'll see one that i think that you really need to see at least certain parts of it that i think will really benefit you this is an example of one of those interviews this was from bloomberg it was an interview with grantham robert jeremy golfo grantham who i respect a tremendous amount he's been around for decades and decades i've been watching this guy for ages and he's very good at certain aspects of spotting things in the market such as


bubbles and so we'll get into it i'll let you guys see it all for yourself i'm pulling out certain parts that i think are relevant we'll talk about it i'll give you my take in which case i have to make sure to give you the disclaimer that nothing in this video is intended as personalized investment advice for you and you might wonder who is grantham he's been around a long time and you can take my word for it but also he's got over 11 billion dollars assets under management with his company that he


co-founded and he is the chief investment strategist of grantham mayo and van otterlu grantham is an individual who a lot of institutional investors lay a lot of trust into his strategy and his understanding so i'm going to show you what he's talking about a lot of times i want to show you part of the interview because it's going to benefit you other times i'm showing it to you because it's showing you that there's other people besides me who are saying certain things he's agreeing i'm agreeing with him he's


agreeing with me so let's get into it history says that when you reach this level of craziness the market tends to break within a few months rather than a few years and just for disclosure that last part was talking about a previous interview he did over a year ago so i don't want you to think that that was something he just said but the next part of the video is talking about how the markets continued higher so technically he was early in that call but then the has continued higher and then grantham


goes on to explain how this is exactly what you should expect to see at the top of a market at the point where a bubble is about to burst 2021 was a great year for stocks if i'm not mistaken the seventh best in a half century and and this has been exactly how the great bubbles have broken the the blue chips the s p 500 have kept strong right up to the last second and wave after wave of the stocks that had made the real running uh peel off and drop and i should say something that there's


a lot of negativity i'll say in the strategy or the expectations of where the market's going in terms of grant them and in terms of myself which is why i'm bringing this interview he agrees with me but that doesn't mean that there's not opportunities there's actually more opportunities because this market is very likely to break that means that there's a lot of opportunities a lot of money to be made more millionaires made in the great depression than any other time in


history this is a huge divergence of a kind that has never happened other than the super bubbles of 1929 and 2000. and when he talks about divergence in this next part he's talking about the divergence between how well a few of the select players such as the fang stocks for example a few of the top players are getting all the gains meanwhile underneath the surface you've got the russell 2000 a lot of stocks are doing very poorly right now a lot of stocks that are not the main ones you hear


about on the news all the time they're not doing so great this is an enormous divergence and it happens on the upside for the blue chips so this is absolutely it's almost eerily classic it's a pattern it's a pattern it's a very rare pattern and we have been checking off this list all year when he says eerily classic it's kind of like eerily similar to what we saw before in 1929 which is the whole point of the video series i made for you the four part video series about the four


horsemen of the economic apocalypse which was detachment debt demographics and defaults so go back and check out that video series if you haven't seen it yet i'll put a link to that below in this video also it's things that are setting up exactly exactly like they did before the big stock market crash of 1929 and also the way it's setting up is similar to a lot of the major bubbles which burst right before they burst and the nasdaq has started to weaken relative to the blue chips the russell has started to


weaken much much more so even than nasdaq when he's talking about the nasdaq is starting to weaken and he's talking about the russell is weakening even more that's what i'm talking about it seems like the stock market is doing so great because there's a few outlier companies that are doing really really well and everybody even central banks from sweden are putting money into some of these stocks and driving them up even higher but in the meantime there's a lot of weakness underneath the surface


at the risk of putting words in your mouth you are as certain as you were then if not more i would say clearly more if you stick with me for a little bit here you're going to see in this video jeremy grantham talks about there's not only bubbles in the stock market but there's bond bubbles and there's also bubbles in the housing markets all over the world just in case i haven't given you enough warnings about the buy the dip mentality here's one more for you we're now in the buy the dip


mode which the super bubbles specialize in you don't have two years of buying frenzy dying overnight typically so even in 1929 you had some magnificent rallies keep in mind with this next part i always tell you about how it's like a pendulum where it over corrects it gets overvalued then it gets undervalued overvalued undervalued it's a pendulum swinging back and forth he's talking about when the bubble bursts it not only goes back to where it would realistically trade at in terms of the indexes


in terms of individual stocks he says that it over corrects and it goes even a bit lower and for a long long time there's a lot of dead money sitting around as this market comes down it's going to be sitting there for years if you're right and stocks are in a multi-sigma deviation from the statistical trend tell me what happens the s p 500 peaked at almost 4 800 points or does it bottom the trend line being slightly generous is 2500 and most of the great bubbles the super bubbles go below trend and stay there


for quite a while in the greenspan era that tendency stopped in 2000 yes the nasdaq came down 82 which was very brutal amazon came down 92 but the federal reserve raced to the rescue so loudly and strongly that they stopped the decline in the s p a trend line it only declined 50 percent now remember what i said about the law of diminishing returns that federal reserve is going to take action so the plunge protection team will take certain actions that have a bigger result and then a lesser result and a lesser


result it gets harder and harder to keep the volleyball in the air 50 is a hell of a big decline but it was only enough to get it back then to trent this time trend is at most 2500 and i would expect even if the federal reserve tries to do the same it will be hard to prevent the market from declining to that level and hey make sure to subscribe to the peter leeds youtube channel this channel we're going to keep you guys learning as much as you need to learn as we go through this economic transition that


we're about to run into right now so we're talking about a decline of certainly from the peak of almost 40 percent and of course it declined very quickly 50 in 1929 it declined 50 percent in three years in 2000 and the housing market which was another great american super bubble went all the way back to trend in three years this next part directly addresses how there's all these punk kids out there telling me the way it is saying that the market just goes up it never has corrections anymore i don't know where


you guys are getting this stuff the market doesn't just keep going straight up and the people who know that it doesn't is everyone who lived through the last bubble burst but what if i'm one of those people and i look at history and history tells me that over time independent or including crashes stocks deliver a handsome return and if i just stay in the market i'll get that return whether it's seven percent or eight percent or nine percent or ten percent over time you know if you


could set your dial for 50 years and throw the key away that might make some sense but let me remind you that in 1929 you didn't get back in real terms until about 1954. that's a long wait in 2000 you didn't get back for 13 years by modern standards that's a pretty long wait and in japan which is really the granddaddy of both bubbles land and stocks they are not back to their 1989 peak today that is a very very long wait so if you think you can stand it for 10 or 20 or even 30 years


be my guest but history says a lot of you will not stand it a lot of you will become more conservative deep into this kind of correction now for this next part keep my premise in mind that i've been telling you for years now it's all going to come down together and that includes the housing bubble he makes a few comments about that in this next part and also there's other bubbles too but when you combine them they all magnify their power their negative power basically so keep that in


mind as he talks about the housing bubbles all over the world here that's where we are now we we entered a few months ago into three sigma territory super bubble territory and the other great risk is last year we also entered bubbles in real estate so this is a very dangerous year that we've just had maybe you agree that we're in super bubble territory we are but maybe you even agree with that then you have to make certain decisions to protect your assets and cover your bases and make sure you don't


have your wealth get obliterated and one of the ways one of the things i've done is i sold a lot of my blue chip stocks ages ago and in the event of a big downdraft in the markets a lot of people will have dead money where there's waiting for the recovery other ones will get spooked out and sell as a market's decline either way the only move in my opinion is to get ahead of this and set yourself up so that as this happens you don't get wiped out like the majority of people are going to


if the super bubble bursts as you predict it will what happens what happens to the economy what does history tell us some bubbles are very specialized to u.s growth stocks like 2000 and they and they hurt there is a wealth effect people lose money they they pull back on their spending but they don't hurt anywhere near as much as when you combine that with a housing bubble so in 2008 where we had the only housing bubble in american history that burst and the stock market came down 50 in sympathy


then you're talking serious damage to the economy through the income effect because this time we have as a multiple of family income u.s housing suddenly is more overpriced than it was ever and this might be if you look down the road a couple of years looking back this may be one of the worst times to buy a house you just wait a little bit you'll get it for a lot cheaper in the housing bubble of 2006 to 2008 it's and they got there this last year since we last spoke the biggest increase


20 that the u.s housing market index has ever had has taken it to a new high and they are in the us still much cheaper than canada australia new zealand london paris etc so that is a global event that could cause enormous pain so we have a housing problem we have a stock market bubble like 2000 we have overpriced commodities oil is 88 and and we have of course the lowest real rates in the history of math if bonds are overpriced and stocks are overpriced does that make the traditional 60 40 balance portfolio


useless absolutely yes he talks here about some of the ways in which things are actually worse now than they have been ever and what about now now you have a much higher ratio of debt to gdp you have much more debt on the balance sheet of the federal reserve and you have much lower rates talking in an email i was sending to one of you the other day one of you people that commodities and not just commodities but gold specifically may be one of the things that gets you on the other side of this economic


transition that we're about to see it may be one of the few safe harbors it's not that inflation will go roaring back to 1972 or 1982 it's that it will always be part of the discussion from now on in my opinion instead of forgetting about it it will be spiking and irritating and falling back and then spiking again it will be part of the scenery in the way it used to be in the second half of the 20th century there's a lot about this economy i think that we'll be dragged back into the


late 20th century we've had a very very abnormal honeymoon goldilocks period for 20 years which i think is ending let me put it this way we're in the early stages of running out of raw materials of course we live on a finite planet there's only a certain amount of cheap oil cheap nickel cheap copper and we're beginning to hit some of those boundaries and we're going to have bottlenecks here there and everywhere the food price index of the u.n is about as high as it gets a growing food is not getting easier


climate change is coming with heavy floods serious droughts and higher temperatures none of these make farming easier so we're going to live in a world of bottlenecks and shortages and price spikes and we have to get used to it and learn to manage our way around i like always says here that commodities typically do well in times of inflation and a lot of times they do and we're not talking about just coal we're talking about copper everything but this is also here one of the points where i don't


agree with them he's probably right i'm probably wrong but i don't think inflation is going to go dramatically higher at all and he's not saying it's going to go dramatically higher either but he's saying that it'll increase and fade away and increase the fade away the forces causing it to fade away a lot of forces pushing against inflation is that the entire economic system the entire economy is going to be suffering as is every single person in the economy they're not going to be


buying anything that's going to put a damper on the velocity of money it's going to put a damper on the inflationary pressure commodity prices that people perceive to be high right now may yet go quite a bit higher i think so and it may well turn out that owning commodities or selected commodities will be something of an escape valve commodities have a long history of doing quite well when inflation picks up for obvious reasons and inflation is quite likely to pick up looking out into the future


it is pretty clear that we are running out of labor fertility rates have dropped like a stone china is reeling from the shock of finding that it has 10.8 million uh babies last year it's only the other the other year seven or eight years ago it had 20. and this means absolute certainty that the cohorts of 20 year olds coming into the workforce will will be smaller going forward everywhere everywhere in the developed world we're below replacement uh in fertility by the way that he sees inflation so pay


extra special attention to this next section and also at the very end i keep his best comment for the very end because i want to say something so i'm not trying to tease you on to watch the whole video but i'm saying watch the whole video the end part is my favorite the federal reserve is confident that it can contain inflation with a series of incremental rate hikes what do you think it'll take i think the fed absolutely does not get the pain that's involved with a bubble breaking


you can see that in the history of the last 50 years greenspan encouraged the tech bubble he bragged about the productivity gains from the internet that would last forever actually productivity has declined slowly but surely since then um when it broke it caused a lot of pain bernanke learned nothing he encouraged the housing bubble he denied its existence even though it was a three sigma one in a hundred year event that had never occurred in american history before and what have we learned we just went


straight back into the game over stimulating pushing the rates down down and down they have gone for 50 years so they started at 16 on the long bond and now the real return you would get is -2 do you have any confidence in the current chairman jay powell no no he hasn't expressed any reservations about the greenspan bernanke yellen powell policy of pushing rates down they act as if a low rate is a panacea and comes with no downside that is clearly nonsense it's created i think the biggest evil in


in our society and that is inequality if you drive up the price of assets systematically and it's bound to happen if you drive the rates down to negative territory who do you make money for you make money for the people with assets who earns the assets the top one percent has 35 percent of all the assets the top 10 percent have practically all the assets what are the what's the asset ownership of the bottom half a rounding error a practically none so you mark up the assets and that that's


your contribution contribution to society what you're doing is pushing down on labor pushing down on the bottom half with no offset from increasing their assets since they have not and you're making the top one percent ineffably rich and the data bears that out right down to the last two years when the top point one percent has doubled its wealth during covert and and the bottom fifty percent i can assure you has not doubled its wealth do you guys remember when i told you about how i have a problem with the way that the


entire financial system is set up that there's a lot of room for influence and a lot of putting the individuals last and bigger companies getting bigger increasing their profit margins all of that everything that's wrong with the economy is because a lot of the ways it's been set up and i always say you can't fix it because there's too much of a complete train wreck to unwind or untie all this mess that they've created the dominance of a handful of firms has increased steadily in most


subsets and so profit margins have gone up and uh the power of corporations has gone up and they've been able to use more of their power in influencing government and they have there is a lot of regulatory capture where people from business uh tend to run the agencies that regulate the industries so it's been a wonderful time to make money at the corporate system and the share of gdp that goes to corporate profits has steadily risen and the share going to labor has steadily fallen you like green as a theme


[Music] are there any other themes or trends that you're willing to bet on i i tell you what i i think about the future and that is the green will turn out to be just a subset of a of a bigger more comprehensive issue and that is loosely speaking living within our means and thank you to jeremy grantham and thank you to bloomberg and also make sure to watch the entire interview by clicking on the link below this video and so that's what a lot of what we are finding with the peterleeds.com


newsletter we're pulling up these stocks that we believe will be going up a lot in price because they're just small companies most of them not all of them but a lot of them are small companies just getting started getting their proof of concept phase underneath their belt building other teams expanding their footprint this is the kind of stuff that you want to invest in even in certain types of stocks even in a downward market