The veteran investor called the stock market a 'real McCoy' bubble, and now Jeremy Grantham fund is trailing the S&P 500 by 14 percentage points

The veteran investor called the stock market a 'real McCoy' bubble, and now Jeremy Grantham fund is trailing the S&P 500 by 14 percentage points.


Global stock markets were subdued on Thursday after significant gains in recent days and as U.S. trading remained closed for the Thanksgiving holiday.

Being too bearish in this pandemic-stricken U.S. stock market can be costly.

Investors have been in an upbeat mood this week, pushing the Dow above 30,000 for the first time, on news of the development of coronavirus vaccines and treatments.

That is apparently the lesson that Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., learned this year as his fund has seen clients pull billions of dollars from his flagship fund as it has badly trailed the broader stock market.

They then became more cautious as coronavirus infection rates remain high in many major economies and after the release of a batch of discouraging U.S. economic data, including jobless numbers.

Germany's DAX was down 0.1% to 13,291 while France's CAC 40 dipped 0.1% to 5,565. Britain's FTSE 100 slipped 0.5% to 6,356.

According to a Bloomberg News report, GMO trails the S&P 500 index by 14 percentage points. Business outlets reported that customers have withdrawn $ 2.2 billion from the fund in 2020.

US markets will remain closed on Thursday and open for half a day on Friday.

In Asia, Japan's benchmark Nikkei 225 ended the index's highest level at 26,537.31 since the collapse of the Japanese "bubble economy" nearly three decades ago.

Australia's S & P / ASX 200 slipped 0.7% to 6,636.40 points, but South Korea's Kospi rose 0.9% to 2,625.91. Hong Kong's Hang Seng rose 0.6% to 26,819.45, while Shanghai Composite rose 0.2% to 3,369.73.

Grantham U.S. Is presenting a very frightening picture of the investment landscape, suggesting that trading by outside investors and speculators represents a market that may be the brightest in their careers.However, due to the historical rebound in some regions, markets have not complied with their critical approach.

Cases of COVID-19 continue to soar around the world, and deaths related to the sickness are growing, hitting more than 1.4 million people cumulatively worldwide. Worries are growing about it spreading during the Thanksgiving holiday in the U.S.

In Japan, authorities asked restaurants and bars to close early, and people to refrain from travel. European governments are looking to ease existing restrictions ahead of Christmas, though many limits on business are expected to continue.

The S&P 500 index SPX, -0.15% is up 12.2% so far this year, the Dow DJIA, -0.57% has gained nearly 5% over the period and the Nasdaq Composite Index COMP, +0.47% has climbed just shy of 35% in the year to date, with all three benchmarks trading at or near all-time highs.

And even woebegone, small-capitalization stocks, which have been hit particularly hard by the COVID-19 health crisis, have mounted a decisive rebound, up nearly 10% on the year and trading in record territory. 

Economic data has been mixed this week, with reports showing the number of Americans seeking unemployment aid jumped last week to the highest level in more than a month. A separate report showed consumer spending posted the weakest gain since April. 

“The market overall has reached by most standards what we call overbought conditions, and that typically suggests that the market would need to digest the gains, perhaps pause a bit, and consolidate,” said Quincy Krosby, chief market strategist at Prudential Financial.

In June, one of GMOs chief investment executives, Ben Inker, told investors that in a customer letter cited by Bloomberg, it was time to sell the stock. Inker suggested to Bloomberg that investing is not an easy game."The cruel logic of being a value manager is that your credibility with the client is at its lowest level at the time your opportunities are at their best," he was quoted as saying.

The Commerce Department said US consumer spending, the economy's primary driver, grew at a sluggish 0.5% in October, the weakest gain since April when the epidemic first erupted. At the same time, the government said that income, which provides fuel for consumer spending, fell 0.7% in October.

In the energy trade, benchmark US crude fell 79 cents to $ 44.92 a barrel. Internationally, Brent crude fell 84 cents to $ 47.69 a barrel.

The dollar closed down 104.24 yen to 104.24 yen. The euro costs $ 1.1901 from $ 1.1885.