The current market is disturbing; very low interest rates, courtesy of the Federal Reserve or other central banks, help create stock market bubbles, because no one can achive a safe return in financial instruments - bonds, or savings accounts. Money in a savings account in America is returning a net loss due to the low interest rate being lower than the nominal inflation rate. And it is even worse in much of Europe.
Previous recent market crashes have been softened and retarded by dramatic lowering of interest rates by central banks not only in the US, but across the western world.
What do you think might happen if the market had a crash like 1929 now? With interest rates near zero to even negative real rate or even just flat NEGATIVE rates? Think of the political consequences if we had a market crash like 1929 now....... Whoever believes they know the political outcome of that sort of financial difficulty, here in the USA, is probably misinformed.
One thing I always remind myself, is that when prices of anything are really high, one should sell, and then buy them when they become cheaper, or really cheap.
But most stock market buyers buy when things are going up, and ultimately end up selling when things are cheap, even though that is the pathway to personal financial armageddon.
I have been giving serious thought to covering much of my portfolio with calls which are best sold near market tops, but find there is little real profit offered on selling calls right now - which says to me that a lot of other folks think the same way I do, or do not expect the market to continue to rise exponentially forever.
Mr Grantham's discussion sounds pretty accurate to me, even though I have have generally been optimistic most of my life. Artificially holding down interest rates does not allow people to save in a safe and timely manner.
Mr Granthan alluded to my comment in the previous paragraph with his comments about doubling times of saving with lower interest rates - 4 X more years to double savings. Dramatically extended doubling times are more concern to living people with finite lifetimes to invest in, but far less concerning to governments and other organisations with potentially infinite lifetimes. Government debt due in a century is someone elses problem.. Running out of money in ones own lifetime is your problem.
I really liked Mr Grantham's comments about bit coin and gold too. One does kind of feels like a chump watching them rise right now, but parabolic arcs usually end badly too.
I have chosen to stand aside the rush to bitcoin for now - I have faith that governents will quickly learn how to steal them too.
I would suggest being debt free if possible is always a good plan.
When will the bubble burst, you ask? When there are more sellers, than buyers.
Or as Mr Grantham stated, when the current enthusiasm begins to meet reality..