‘Prepare for an epic finale’: Jeremy Grantham warns ‘tragedy’ looms as ‘superbubble’ may burst

A “superbubble” appears dangerously near its “final act” after the recent rally in U.S. stocks lured some investors back into the market just ahead of potential “tragedy,” according to Jeremy Grantham, the legendary co-founder of Boston-based investment firm GMO.

Grantham, who has repeatedly warned investors of a bubble in markets, said in a paper Wednesday that “superbubbles are events unlike any others” and share some common features.

“One of those features is the bear-market rally after the initial derating stage of the decline but before the economy has clearly begun...