Long-term value investors who "simply [have] no alternative to standing our ground and taking it on the chin when crazy markets get even crazier. THE GREAT WAIT CONTINUES....

Bull market will "end badly" but still has a long way to go: Jeremy Grantham

That GMO's Jeremy Grantham thinks U.S. stocks are approaching bubble territory and says the current bull market will "end badly" isn't at all surprising. Grantham is one of Wall Street's most notable and outspoken bears, and in recent years has warned about resource scarcity that could doom a lot more than your 401(k). 

So what's most notable about the hedge fund manager's latest quarter letter, published in Barron's, is that Grantham predicts the current bull run "will not end for at least a year or two and probably not before it reaches a level in excess of 2250 on the S&P 500" (that's a 20% rise for the S&P 500 based on Friday's close).

Grantham offers a specific roadmap for how it's likely to occur:

• 1) This year should continue to be difficult with the Feb. 1 to Oct. 1 period being just as likely to be down as up, perhaps a little more so.

• 2) But after Oct. 1, the market is likely to be strong, especially through April and by then or in the following 18 months up to the next election (or, horrible possibility, even longer) will have rallied past 2250, perhaps by a decent margin.

• 3) And then around the election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse, depending on what new ammunition the Fed can dig up. 

To be clear, Grantham's letter is aimed not at short-term traders but at long-term value investors who "simply [have] no alternative to standing our ground and taking it on the chin when crazy markets get even crazier."

DYI Comments:  For the value conscience long term term investor the waiting game for better values ahead is nothing more than a blink of an eye.  The short term trader who has turned bearish it will feel like eternity! The Great Wait Continues with our model portfolio with its 10% allocation to traditional stocks as opposed to our 25% commitment in gold mining companies.

Active Allocation Bands 10% to 60%

45% - Cash -Short Term Bond Index - VGPMX

25% -Gold- Precious Metals & Mining - VBIRX

20% -Lt. Bonds- Long Term Bond Index - VBLTX

10% -Stocks- Equity Income Fund - VEIPX

[See Disclaimer]

It is far better to appear stupid during market blow offs than to be really stuuu-pid(stupid) when the market declines substantially as your losses pile up.  Value always wins in the long run but in the short run it will test one's patience.

THE GREAT WAIT CONTINUES....

DYI