GMO strategist Jeremy Grantham warns of a possible 70% decline in overvalued U.S. equities, citing historical bubble patterns.
Jeremy Grantham, co-founder of GMO Asset Management, warns U.S. stocks could drop as much as 70% from peak to trough, labeling the market the most expensive in history. GMO oversees $85 billion in assets, and Grantham’s call hinges on a two-sigma bubble framework, which historically reverses to trend without exception.
Grantham notes the market’s price-to-earnings ratio has averaged over 60% higher since 2010 compared to the prior century, driven partly by prolonged low interest rates. With the 10-year Treasury yield at 4.41% as of June 24, 2026, he attributes current valuations to a persistent premium that may no longer be sustainable.
The strategist refrains from pinpointing a precise timeline for the decline, suggesting it could unfold within weeks or stretch over two years. His warning underscores the risk of a severe correction rather than a routine pullback.