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GMO

Jeremy Grantham

Research

10 Pages

GMO argues the first and easiest leg of a speculative bubble has burst, but risks remain. Valuations sit above long term norms and past cycles often overshoot lower. A supportive Presidential Cycle and easing inflation could delay further declines, yet weakening fundamentals would likely drive the next phase.

Source: GMO

Key Takeaways

Bubble aftermath: Speculative leaders crashed while valuations remain above long term norms.
Further downside risk: Trendline S&P target near 3200 suggests more downside if profits weaken.
Macro headwinds: Housing, inflation, and geopolitics broaden risks and may extend the bear market.
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