The U.S. Superbubble

The 2022 bear market has marked the end of the super-growth cycle.

The U.S. Superbubble, as Jeremy Grantham has termed it, featured the most dangerous mix of factors in modern times at the end of last year: all three major asset classes – housing, stocks, and bonds – were critically historically overvalued. And all have retracted in 2022. Perhaps the most pertinent question we sought to answer for our clients at GMO’s Fall Conference was: what actions should investors take during the deflating superbubble?

Explore our content below and Contact Us or your GMO representative for more information. Intended for accredited investors.

Featured Session:


Two years ago at GMO’s 2020 Fall Conference, we first highlighted the extraordinary valuation spread between cheap Value and expensive Growth stocks and launched GMO’s Equity Dislocation Strategy to take advantage of this historic opportunity.

At this year’s Fall Conference, Equity Dislocation Portfolio Manager Ben Inker and Carl O’Rourke, a Systematic Equity team quantitative researcher, provided an update on the ongoing attractiveness of Value relative to Growth. Even after Value’s recent significant outperformance, it is nowhere near back to its average relative valuation compared to Growth, which means the opportunity remains quite strong. And even if Value/Growth spreads do not continue to come back to historical averages, the act of rebalancing provides an incredible opportunity at today’s valuations.

Ben and Carl discussed the evolution of Equity Dislocation, which is long the cheapest Value stocks and short the most expensive Growth stocks and still our highest conviction Asset Allocation trade.