Veteran investor is right to question stock market exuberance

Jeremy Grantham's warning that an epic bubble' has formed on Wall Street should not be ignored

Jeremy Grantham, a wise old investor with an excellent record in calling time on wild stock market exuberance, picked his moment well this week to warn that a fully fledged epic bubble" had formed on Wall Street. On cue, world share prices hit all-time highs as investors seemingly looked beyond the pandemic and decided everything was about to go very right.

Hopes for a Democratic clean sweep of US Congress were priced up before Senate election results in Georgia were even confirmed. The talk now is of great reflation" trade - serious US government spending to stimulate economic growth, coupled with a pleasant level of inflation (but not enough to panic the Federal Reserve).