Jeremy Grantham warned a looming slump in corporate profits would send stocks tumbling again, and suggested the S&P 500 could plunge by another 25%, in a recent interview with the Associated Press.
"Of course earnings will now come down," the veteran investor and market historian said. "The big second shoe falls where earnings decline," he continued, noting the first shoe was the compression of valuation multiples for stocks.
Grantham estimated the S&P 500's fair value in a year's time would be around 3,000, and emphasized it could trade below that level for several months. The benchmark index has already sunk by 18% this year to around 3,940.