Grantham is a prominent English investor with a background in economics from the University of Sheffield and Harvard Business School. He currently serves as the chief investment strategist at GMO LLC, a firm specializing in analyzing historical market trends and forecasting outcomes up to seven years ahead. Known for his contrarian approach, Grantham often buys and sells in defiance of prevailing market trends. His reputation was built on correctly identifying speculative bubbles, such as avoiding real estate during Japan’s late 1980s asset price surge and steering clear of tech stocks during the dot-com bubble of the 1990s.
What Are Market Bubbles?
A market bubble occurs when asset prices skyrocket far beyond their true value, usually driven by herd behavior as investors jump on trends, expecting prices to keep climbing. Think of it like a balloon being overinflated—prices swell until the bubble inevitably bursts, causing values to plummet. Investors who bought at inflated prices end up facing significant losses when the bubble pops.
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