NEW YORK -- Six floors above the cramped, narrow street where the financial world converges, where the ever-rising Dow Jones is creating unprecedented jubilation, James Grant looks grimly out onto Wall Street.
"The current levels of [stock] valuation are poison. They're too high. They're dangerous," the market historian and pundit warns. He points down from his sparsely decorated office of his newsletter, Grant's Interest Rate Observer, to the line forming outside the stock exchange. "See all those people waiting to go in and see their stocks go up? They weren't there in 1981. A bull market then was just as inconceivable as a bear market is now. They don't believe that the cycle will play out."
They, clearly, are not like James Grant. But then, not many people on Wall Street are these days. Even after its recent downturn, the 15-year-old bull market continues to astound even the most optimistic forecasters. Grant, however, stubbornly clings to a pessimism that has made him famous. The rise of a new economic era? Humbug! For James Grant, right now the most wrong man on Wall Street, economic history will soon repeat itself, and he will be vindicated.
For now, though, he must find solace in the role of unapologetic iconoclast. Shaped by a career that began in Baltimore, it's a role that seems to suit him, and has endeared him to the media. A regular commentator on CNN and "Wall $treet Week," he is quoted frequently, always ready to offer a counterpoint to the growing bull ranks.
"He's playing a very appropriate role. He's screaming, 'The wolf is coming, the wolf is coming!' which is useful, otherwise everybody would forget a wolf exists," says Bob Killebrew, managing director of Alex. Brown & Sons Inc.
Even today, as Alan Greenspan's Federal Open Market Committee meets to decide if interest rates should be raised, Grant insists on being contrary. The Federal Reserve could decide to tighten credit, and potentially rein in the bull. So all the financial world breathlessly awaits the words of Fed Chairman Greenspan -- all except Grant, that is.
"No, I don't think he's going to raise interest rates," Grant says. "And what do I think he's going to say? I know it will have the consistency of Cream of Wheat."
The tall, angular Grant speaks and writes with the conviction of a zealot. When asked, "What if you continue to be wrong?" he answers as if he'd been asked, "What if the sky's falling?"
"It would go against every known precept of economics, especially supply and demand," he laughs, at once amused and dismissive.
Grant, 51, respects the past not only because he studies economic cycles in history, but because he has observed stock market whims firsthand for two decades.
After high school in New York and a stint in the Navy, he clerked at a Wall Street firm in 1969. That was a bad year for the market. Soon after Grant began learning the trade, a slew of firms, including his own, folded. Could this be the source of his %J skepticism today?
"There is an oft-repeated line on Wall Street that one's perceptions of markets are colored by one's formative experiences. ... For me that wasn't the case ... I think frame of mind is set early in life. Doubters are born, not made," he says, contradicting yet another Wall Street maxim.
Grant left his native New York to study economics at Indiana University, where he received a bachelor's degree, and went on for a master's in international affairs at Columbia University. It was at Columbia, where he edited the Journal of International Affairs, that he discovered a talent for writing.
His first post-collegiate job was "writing obituaries and finding salacious news" at The Sun. His 2 1/2 years in Baltimore were less significant for his writing than for his personal life, he says. He met and married the then-Sun fashion editor, Patricia Kavanagh. The couple moved to New York in 1975 when he was hired by write for Barron's, the weekly financial newspaper devoted to covering the ever-capricious bond and stock markets.
It was during his eight-year tenure at Barron's that he witnessed a huge market downturn, with pundits predicting the death of stocks. "It was an era of great inflation. All things that are now revered, considered omnipotent, things that are taken as gospel today, were then doubted," he says.
In 1983, an internal political scuffle at Barron's left him looking for a job. He considered writing for a financial magazine, "but I didn't want my copy homogenized. If you work for Business Week, you have to write in the Business Week voice. If you work for Time, you have to write like Time."
Instead Grant, who by then had two small children and a third on the way (he now has four), struck out on his own.