Title: A Difference of Opinion
Review: According to Jeremy Grantham, founder of GMO and manager of $48 billion (that's billion with a "B") in assets, the market is currently overpriced with a trailing P/E of 24. The trendline P/E is about 16 and Tanaka suggests in his book that it should be even higher than 24.In fact, Grantham reasons that the expected annual returns on large cap and small cap U.S. stocks over the next 7 years to be 1.4% and 2.5%, not some ultra bull market that Tanaka is suggesting that is driven by growing PE's.Why should we listen to Grantham? Simply put, he is respected in the investment community and has $48 billion to prove it.
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