S&P To Rally Above 2,250 Before Election Collapse: Pro

GMO’s Jeremy Grantham believes the bull market won’t end before the S&P 500 SPX tops the 2,250 level.

In his latest quarterly letter to shareholders, Grantham, who predicts the market will start collapsing around or after the 2016 presidential election, notes that this year probably will be tough for stock investors until October.

[_{via MW}]“But after October 1, the market is likely to be strong,” especially through April 2015, he writes. Perhaps by the time of the November 2016 election, the S&P 500 will have rallied past 2,250, maybe by a decent margin, according to Grantham.

But then “around the election or soon after, the market bubble will burst, as bubbles always do,” Grantham writes. The stock market “will revert to its trend value, around half of its peak or worse, depending on what new ammunition the Fed can dig up.”

The S&P was at 1,881 on Friday. According to Grantham, whose  2,250 SPX level-forecast suggests a 20% upside, the Index is already 65 percent overvalued.