James Montier: The Advent of a Cynical Bubble

James Montier of GMO just published a piece about what he calls the "cynical bubble".  Professional investors see the market as overvalued but have no choice but buy in. These "fully-invested bears" contribute to a "near rational" bubble (current good fundamentals extrapolated), something Montier calls a "greater fool market" in which the participants believe they can exit first when the market turns.

Full piece: The Advent of a Cynical Bubble

The "near rational" bubble:

Montier Feb 2018 - Near Rational Bubble.jpg


Professional investors think the market is overvalued:

Montier Feb 2018 - Valuation Sentiment.jpg

But they are also fully invested in the market:

Montier Feb 2018 - Positioning.jpg