The 5½-year bull market for stocks has a bit further to go, but then it's going to collapse, says Jeremy Grantham, chief investment strategist of money management firm GMO.

"I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2,250) before a very serious decline," he writes in his latest quarterly commentary.

A move to 2,250 for the S&P 500 index would represent about a 9 percent gain from Wednesday closing level of 2,072.

The market has an "obvious overvaluation," Grantham says.

The S&P 500 had a trailing price-earnings ratio of 19.27 Friday, up from 18.85 a year ago, according to Birinyi Associates.

As for timing, "usually the bubble excitement — which seems inevitably to be led by U.S. markets — starts about now, entering the sweet spot of the presidential cycle’s year three," Grantham writes.

Earlier this year, he predicted the bubble will burst around the time of the 2016 presidential election, sending stocks down 50 percent or more.

Meanwhile, Dan Morris, global investment strategist for TIAA-CREF, warns that volatility may return to the stock market soon.

The market's vulnerability could be exposed as the Federal Reserve ends its quantitative easing this month, and interest rates move higher, he told CNBC/Yahoo Finance. "That’s going to be a bumpy transition," Morris said.

"We should kind of enjoy this relative low-volatility, rising environment. But appreciate that we’re more likely than not to get another bout of volatility like we had recently as the market starts focusing again on rising interest rates in the U.S."

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