Jeremy Grantham’s recent piece, Let the wild rumpus begin, argued that the US is in its 4th “superbubble” of the last 100 years and is in its final stages. This inspired us to refresh our bubble framework (below, taken from our 2017 blog post). Many valuation measures of the US equity market are near historic highs and with the Fed about to tighten monetary policy, investors should naturally be skeptical of US equity allocations.
We are heavily influenced by the work of Charles Kindleberger and Hymen Minsky at Variant Perception, and we’ve dedicated much of our work to understanding how boom and bust cycles progress.