#12 - Jeremy Grantham: Bubbles, AI, Climate Change, Population Growth
Mar 19, 2024
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Jeremy Grantham, Co-Founder of GMO, discusses investment bubbles, AI impact on markets, monopoly dominance in America, climate change urgency, and the decline of natural services due to short-term profit-oriented practices. He also explores the accelerating impact of AI on technology and sustainability.
Grantham stresses the importance of adapting to market shifts and challenges in investing.
Declining birth rates globally pose future workforce crisis due to societal, economic, and lifestyle factors.
Growing concern over depleting natural resources like critical metals necessitates transition to sustainable technologies.
Deep dives
Jeremy Grantham's Interest in the Stock Market and History
Jeremy Grantham shares that his interest in the stock market was sparked by buying and selling shares as a young man, leading to a fascination with market dynamics and the randomness of stock recommendations. He discusses how his love for studying history, including stock market history, ties into his curiosity about what drives the markets at a deeper level.
Challenges of Concentrating on Short-term Earnings and Shift to Bigger Picture Analysis
Grantham talks about his struggle to focus on quarterly earnings in the market, eventually feeling overwhelmed by the short-term focus. He describes transitioning to larger-scale analyses such as sector, country, and asset class assessments, which rejuvenated his investment approach and provided new perspectives over the years.
Historical Context and Evolution of Investment World
Grantham reflects on the significant changes in the investment landscape over the past decades, including the evolution of pension funds, intellectual leadership shifting to endowment funds, and the emergence of leading companies. He highlights the importance of adapting to market shifts and the challenges of investing in a competitive and evolving environment.
Jeremy Grantham's Outlook on Market Bubbles and Potential Risks
Grantham delves into the concept of market bubbles, drawing parallels between past instances like the dot-com bubble and current market trends. He raises concerns about escalating market valuations, warns about the dangers of speculative growth companies, and discusses the potential risks associated with market excesses and lofty valuations.
Declining Birth Rates and Impacts on Workforce and Society
As birth rates decline worldwide, particularly in developed countries, issues such as challenges with fertility, reduced interest in sex, and changing societal attitudes towards childbirth are becoming prominent. Factors contributing to this trend include concerns about job security, insufficient support for childcare, and the pursuit of educational and career goals affecting the timing of family planning. The declining population of babies is leading to a potential workforce crisis in the future, as seen in countries like Japan where the cohort of 18-year-olds has decreased by 50%, impacting economic productivity.
Resource Depletion and Environmental Challenges
The podcast also highlights the growing concern of depleting natural resources, especially critical metals like nickel, cobalt, and lithium essential for modern technologies. The increased demand for these scarce materials poses sustainability challenges, with diminishing reserves leading to higher extraction costs and environmental impact. The discussion emphasizes the need for transitioning to greener technologies and sustainable practices to mitigate resource shortages and environmental degradation for future generations.
Jeremy Grantham is the Co-Founder and Long-Term Investment Strategist of GMO, which manages over $60B. Jeremy discusses his background and shares fascinating insights about a broad range of topics including investment bubbles, AI, crypto, reversion to the mean, climate change, population growth and natural resources.
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