Forget Dow 16000

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The 30 didn't manage to hold on to close above the most recent magical milestone yesterday, and it isn't looking great today. No matter. Time to turn our attention to: Dow 21000!

American equities could well advance another 30% even though they’re already seriously overvalued–dragging other markets higher with them–argued Jeremy Grantham, a legendary value investor and co-founder of fund firm GMO, in his latest quarterly letter to investors….

Is it a bubble? Mr. Grantham doesn’t think so, or at least not yet. The mass psychosis where panic of missing out sends small investors flooding into the market isn’t there yet….

What seems pretty clear is central banks have created conditions for other bubbles to form, if they haven’t already. And that they look in no mood to put a halt to asset market appreciation is as good a reason as any to expect Mr. Grantham’s 30% upside could yet be achieved, whether markets are fairly valued, overpriced or even cheap.

Another 30% Upside For Equities? [WSJ MoneyBeat blog]

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