Jeremy Grantham says sell US stocks, and warns that no adviser will ever tell you to do it
The veteran investor is making a blunt contrarian call on US equities, and his explanation for why most investors will miss the exit is worth sitting with.
Jeremy Grantham’s current position on US equities is about as direct as it gets. “Don’t own US stocks.” That is the call, and he is sticking to it even as US markets have spent years outperforming the rest of the world, a track record he does not dispute. His argument is that the historical run of outperformance is precisely why the thesis is now wrong, “even though history tells you that is absolutely not the case.”
You will not receive the advice from investment advisers to get your tail out of the market, ever. Jeremy Grantham
The more pointed part of the argument is structural, not analytical. Grantham contends that retail investors will not hear a clear exit signal from their advisers when a bubble deflates, because the incentive to keep clients invested is too strong. The implication is that the correction call has to come from somewhere outside the advisory relationship, or not at all.
Grantham is also cataloguing a broader set of stresses, from environmental data to demographic pressures in places like Japan, that color his skepticism about long-term growth assumptions underpinning current valuations. Those concerns sit behind the equities call rather than beside it. The core trade, as he frames it, is straightforward: reduce US equity exposure before the crowd does, knowing the crowd’s advisers will not prompt them to move.