Jeremy Grantham's Losing His Growl

They say the time to get really nervous is when the last bear turns bullish.

Did this just happen?

Jeremy Grantham, legendary investment manager and the chairman of Grantham, Mayo Van Otterloo, has been Wall Street's most respected and consistent bear for most of the past decade.

But his latest letter to shareholders sags with the weary tone of a man who is tired.

Tired of warning that the market is overvalued, only to see it keep rising.

Tired of fighting the Federal Reserve.

And tired of holding on to cash, waiting for the inevitable disaster that is forever postponed.

The title to his letter says it all: "Fed Up."

"Of course I'm fed up," he explains. "We had risk on the ropes."

Grantham's referring to August, when the meltdown he has long been predicting seemed at hand. The reckless were about to get punished, the prudent rewarded, and risk-taking repriced back to normality.

But instead of allowing the knock-out blow, Grantham writes, referee Ben Bernanke "ends the round early, extends the break, and allows a dangerous injection of adrenaline."

Result? Hopped up and "carefree" financial markets shrug off everything from the housing slump and the dollar decline to slowing corporate profits, and come bouncing back to even riskier and more dangerous levels.

No wonder he's fed up.