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Goldilocks Rules: or Safe as a House in 2007.

This is Jeremy Granthams latest titled letter, Q4 which was released 2 February 2007.

This is a very very good read.
This is only a snippet of what Grantham talks about. I rate Grantham as the very best.

"Goldilocks global conditions, especially cheap and easy credit, have caused the broadest overpricing of financial assets – equities, real estate, and fixed income – ever recorded."

"Over and over again in investing we are confronted with factors over-running far beyond anything we can rationalize.
This was spectacularly demonstrated in the
Internet/Tech Bubble and in Japan in 1990. Just because risk taking is off the charts does not mean it can’t keep going up for another year. In these situations, we always try to be braced for another year of pain for our major bets. This time, our big bet is in our cautious stance. If caution is indeed penalized again this year, we expect another outpouring of “New Era” logic, especially on the topic of the inevitability of private equity deals driving the market higher. “If you can invest at X% and borrow at half X%, why is this not a license to steal that will go
on forever?”