Jeremy Grantham sounds the alarm on inflation, interest rates, markets and the economy.
The veteran investor predicts that stocks will fall and an extended recession will follow.
Grantham shares the story of his dot-com bubble call, and says he’s making a big bet on venture capital.
Prepare for stocks to fall, for a recession to occur, and for both inflation and interest rates to remain high for years, Jeremy Grantham once warned. A new room “Bloomberg Wealth with David Rubenstein.”
The veteran investor and founder of GMO raised the alarmBig bubble“And one A devastating crash Last year, he said, the world has a bigger problem than the outlook for financial markets and the economy.
He also shares his painful experience calling out the dot-com bubble, and reveals that he’s totally into venture capital.
Here are eight of Grantham’s best quotes from the interview, edited for clarity:
1. “I’m so sensitive to the idea that you can be so pessimistic that no one wants to live with you.” (Grant was also asked if people were tired of his dire warnings and dire predictions.)
2. “In the end, life is simple. Low rates increase property values. Higher rates lower property values. We are now in a period where we are at a higher level than the average of the last 10 years.
3. “I suspect that inflation will not be lower than the average of the last 10 years. We are again in a period of moderate inflation, hence slightly higher interest rates.”
4. “The Fed’s record on these things is fantastic. It’s guaranteed to be wrong. They never call it a recession, especially not one that follows great bubbles.”
5. “AI is very important. But it is possible Too little, too late To save us from failure. In the year Depreciating forces from tech stocks in 2021 – probably huge. Rising interest rates and pessimistic power Real estate market – Very negative, slow moving effect. I suspect they’ll take control again, and we’ll probably have a runaway recession and stock price decline in the next year.
6. “The economy, and especially the stock market, is so second on our list of important long-term problems that nobody takes it seriously yet. As we sit here discussing the stock market, we are small. When Rome burns, Emperor Nero is cringing.” (Grantham) (He cited climate change, rampant inequality and population decline as examples.)
7. “So the market made an incredible move from its highs in early 1998. It continued until March 2000. Our clients didn’t allow us to be early and they fired us at a high rate. It’s very annoying to lose money when your golfing partner in the neighborhood pension fund makes a fortune.” .
8. “We invested 75% in early stage venture capital, which most people would consider a strange focus. We call it the best part of capitalism and the best part of American capitalism.” (Grant was also talking about his foundation, which holds 95% of his wealth.)
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