Investors are pouring more money into stock mutual funds in the U.S. than they have in 13 years, attracted by a market near record highs and stung by bond losses that would deepen if interest rates keep rising.
U.S. stocks will decline over the next seven years after almost tripling from their 2009 lows because they are overvalued, said Ben Inker, head of global asset allocation at investment firm Grantham Mayo Van Otterloo & Co.
Billionaire Tom Steyer recalls a dinner at the U.S. Treasury in Washington with two senior department officials and six money managers. It was August 2012, and the meal was part of an effort by the agency to keep up with what the financial community was worrying about. The diners discussed China’s slowdown, Federal Reserve policy and other trends affecting the U.S. economy.
Jeremy Grantham said there is a 25 percent chance that China, the world’s second-largest economy, will “stumble” by next year over imbalances such as too much capital spending, an overheating real estate market or accelerating inflation.
Thomas Perkins beat 94 percent of his mutual-fund rivals in the past decade by investing in midsize companies. He now prefers giants such as Cisco Systems Inc. and Wal-Mart Stores Inc ., and his $12.4 billion Perkins Mid Cap Value Fund is almost at its limit for big-company shares.
Jeremy Grantham , chief investment strategist at Grantham Mayo Van Otterloo & Co., said the Federal Reserve’s policy of low interest rates has harmed the U.S. economy and if the central bank goes ahead with quantitative easing it could make the situation worse.
Jeremy Grantham , who correctly predicted U.S. stocks would lose money in the past decade, said China’s “experimental” approach to reining in asset bubbles may help it avoid a U.S.-style housing market crash.
Jeremy Grantham, chief investment strategist at Grantham Mayo Van Otterloo & Co., said a longer period of below-average economic growth carries the risk of fueling a third stock-market bubble because Federal Reserve Chairman Ben Bernanke would likely keep interest rates low.