Bull and Bear Served at Fund Manager Dinner

In the bull corner, as usual, was Jeremy Siegel -- professor at University of Pennsylvania's Wharton School of Business, and author of the popular investment tome Stocks for the Long Run. In the bear corner, also as usual, was Jeremy Grantham, veteran chairman of Boston fund firm GMO.

And if Wall Street takes a downward step in the next few weeks, I think I'll know why. Nearly 600 of Boston's top fund managers and analysts turned up Monday night for the annual Boston Securities Analysts Society's dinner. And when the two Jeremies went head to head about the stock market over coffee, the bearish Grantham probably took it on points.

He also had the added advantage of speaking second.

It was generally good-natured, fought with PowerPoint presentations and Bloomberg charts. But it had some pointed moments. Grantham, at one moment, accused Siegel of talking "B.S." and came close to suggesting his opponent was a bit of a shill.

Grantham, as often, outlined a doomsday scenario. "Everything is overpriced," he said. And he meant everything -- U.S. equities, foreign equities, emerging markets, bonds, housing and commodities. The whole shebang. Even fine art. "This year the cheap asset class is cash," Grantham said.

He mustered more than a dozen overhead charts to argue that, seven years after the Wall Street peak of March 2000, we are still in an equity bubble. Shares are too expensive compared to profits, he said. And those profits, currently at record levels compared with the national economy, are also artificially high, he said. He gave a 50% chance that profit margins would start to fall again within a year. Within two years, he added, it was "a near certainty."