The Fed’s polices have made all global assets overpriced, according to Grantham. He does point to some asset prices that are only moderately overpriced: emerging markets, Japan, the great global franchises, forestry and farmland (that is not "super-prime Midwestern") and European stocks, though he notes that they are significantly riskier than normal. U.S. stocks (ex “quality”) sell at a negative seven-year imputed return according to GMO’s numbers, while most global growth stocks have a nearly 0% expected return. As for fixed-income? “Most of it has negative estimated returns on our data, and longer debt, as always, carries that risk that may be slight in any period, but is horrific if it occurs — accelerating inflation,” Mr. Grantham writes.
Source: GMO's 4Q letter