What I Learned This Week

What would confound market participants the most in 2018?

Rather than issue another forecast in a sea of thousands of forecasts, we analyze what are the markets telling us and then combine that with the consensus and the big surprise. The big surprise might be “is the S&P 500 close to peaking”? The following signals may be providing important clues. On January 3, 2018, perma-bear Jeremy Grantham of GMO wrote a client memo entitled “Bracing Yourself for a Possible Near-Term Melt-Up”. “I find myself”, he wrote, “in an interesting position for an investor from the value school. I recognize on one hand that this is one of the highest-priced markets in U.S. history. On the other hand, as a historian of the great equity bubbles, I also recognize tha…

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