Although legendary investor Jeremy Grantham is good at discovering market foam, his company has not avoided the boom in technology stocks. Despite constant warnings from experts that the technology stock boom has been overly hyped.
Grantham is a research expert on financial market foam. Currently, he is Grantham, Mayo, Van Otterloo& Co founder and Chief Investment Strategist of Co. (referred to as GMO). He has much research on the classic foam period such as the 1929 crash.
In fact, at the age of over 80, he has experienced countless cycles of prosperity and collapse, many of which were predicted by him, including the bursting of the Internet foam in 2000, the top of the bull market in 2008, and the bottom of the bear market in 2009.
It is reported that the largest mutual fund under GMO has only invested in five of the so-called "tech giants", which have driven most of the stock market's rise this year.
Nvidia and Tesla are the only two companies excluded from the GMO Quality Mutual Fund, which manages $8 billion in assets. And the other five stocks - Microsoft, Apple, Alphabet, Amazon, and Meta - helped the fund achieve a 25% return this year, surpassing the S&P 500 index's gain of over 19%.
"Interestingly, companies like Microsoft and Apple, you would think they would be super crowded, but I don't think so. In fact, we caught them. Obviously, we believe the valuation is reasonable," said Tom Hancock, a mutual fund manager at GMO Quality in an interview
However, he believes that Nvidia is too expensive. Due to the increasing importance of the company in the development of artificial intelligence, its stock price has surged by over 225% this year. Some analysts question whether the company still has room for further development, and as entry into the Chinese market is restricted and new competition from AMD intensifies, challenges are constantly emerging.
Hancock also stated that Tesla does not have a leading advantage compared to its competitors. Its dominant position in the electric vehicle industry is beginning to be tested, with its share in the US electric vehicle industry currently at a historic low of 50%.
He believes that there is still room for growth in other technology stocks, and in the long run, they have not been overvalued.
However, not all analysts agree with this viewpoint. Market veteran Bill Smead warned in a recent report that the current stock market rebound will hardly bring long-term returns, and once investor enthusiasm for technology stocks fades, the stock market will face a serious downturn.
He said, "In the 43 years I have been involved in the stock market, technology stocks are in the late stages of the biggest speculative frenzy."