Money and Finance
- Links
Jeremy Grantham Divines Oil Industry's Future (LINK) [Excerpt from his letter.] The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand....
- Gmo’s 2q 2012 Letter: "welcome To Dystopia!" And "when Bad Things Happen To Cheap Assets"
GMO’s 2Q 2012 Letter comes in two parts. Part I, “Welcome to Dystopia” is Jeremy Grantham’s update to “Time to Wake Up” and “Resource Limitations 2.”In this piece, Jeremy focuses on the continuing global food crisis and what we might,...
- Limits To Growth: Apollo Asia Fund - The Manager's Report For 1q2010
Our concern is over future earnings, given the precarious state of the global economy and doubtful prospects for Asia's exports. Since none of the major problems exposed by the crisis has been addressed, and panic responses have created new ones,...
- Arithmetic, Population, & Energy And The Crash Course
In Jeremy Grantham's 2nd Quarter Letter, he mentioned the fact that "....population growth is on a direct collision course with increasingly scarce resources." And near the end of his letter he wrote: Well, dear readers, happy thoughts and wishful...
- Jeremy Grantham's 2q 2009 Letter: Boring Fair Price!; Running Out Of Resources
Waiting for Markets to be Silly AgainA year is certainly a long time in markets, and so is a quarter. A year ago, equities globally – and everything else for that matter – were very overpriced, particularly if they were risky. A quarter ago, in mid...
Money and Finance
GMO - Jeremy Grantham: Q2 Letter
In the meantime, we are living increasingly beyond our means, and Mr. Market is about to help us reconsider our behavior. This century will likely see the end of the Industrial Revolution and the age of “limitless resources.” Higher prices and (hopefully) voluntary improved behavior will together usher in the post-Industrial Revolution phase of limited resources and frugality. We will all modify our behavior and probably quite fast. We will all re-adopt Yankee virtues (or Yorkshire virtues, I might add) of “waste not, want not,” and get accustomed to using our brains instead of our hydrocarbon brawn.
The prices of commodities are likely to crack short term (see first section of this letter), but this will be just a tease. In the next decades, the prices of all future raw materials will be priced as just what they are: irreplaceable. Oil, for example, will never again be priced on the marginal cost of pumping a marginal barrel from some giant Saudi oil field, as has been the practice for most of the last 100 years of oil production. Real cost is always replacement cost and oil, a precious feedstock for chemicals and fertilizers, simply cannot be replaced. Using marginal cost as a substitute was ignorant and conducive to wasteful consumption of scarce energy resources. It also enabled us to put our collective head in the sand and ignore the growing need for an enlightened long-term energy and climate policy.
Relatively quickly, in 100 years or so, we will run out of oil, underground water, and most non-fully-renewable resources. At current rates, we will do it very, very fast. A major complication now, though, is that we have been brainwashed by repetition to reject this whole idea as irretrievably pessimistic and defeatist, and just well ...thoroughly un-American.
One of the most unfortunate features of our sustained ability to overcome presumed limitations by applying technology is in the dangerous overconfidence it has given us, particularly in our casual and profligate use of resources. Starting now, higher prices will steadily overcome our optimistic assumptions and change our wasteful behavior. We must remember that, after all, in the wolf story, the wolf finally comes.
The prices of commodities are likely to crack short term (see first section of this letter), but this will be just a tease. In the next decades, the prices of all future raw materials will be priced as just what they are: irreplaceable. Oil, for example, will never again be priced on the marginal cost of pumping a marginal barrel from some giant Saudi oil field, as has been the practice for most of the last 100 years of oil production. Real cost is always replacement cost and oil, a precious feedstock for chemicals and fertilizers, simply cannot be replaced. Using marginal cost as a substitute was ignorant and conducive to wasteful consumption of scarce energy resources. It also enabled us to put our collective head in the sand and ignore the growing need for an enlightened long-term energy and climate policy.
Relatively quickly, in 100 years or so, we will run out of oil, underground water, and most non-fully-renewable resources. At current rates, we will do it very, very fast. A major complication now, though, is that we have been brainwashed by repetition to reject this whole idea as irretrievably pessimistic and defeatist, and just well ...thoroughly un-American.
One of the most unfortunate features of our sustained ability to overcome presumed limitations by applying technology is in the dangerous overconfidence it has given us, particularly in our casual and profligate use of resources. Starting now, higher prices will steadily overcome our optimistic assumptions and change our wasteful behavior. We must remember that, after all, in the wolf story, the wolf finally comes.
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- Links
Jeremy Grantham Divines Oil Industry's Future (LINK) [Excerpt from his letter.] The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand....
- Gmo’s 2q 2012 Letter: "welcome To Dystopia!" And "when Bad Things Happen To Cheap Assets"
GMO’s 2Q 2012 Letter comes in two parts. Part I, “Welcome to Dystopia” is Jeremy Grantham’s update to “Time to Wake Up” and “Resource Limitations 2.”In this piece, Jeremy focuses on the continuing global food crisis and what we might,...
- Limits To Growth: Apollo Asia Fund - The Manager's Report For 1q2010
Our concern is over future earnings, given the precarious state of the global economy and doubtful prospects for Asia's exports. Since none of the major problems exposed by the crisis has been addressed, and panic responses have created new ones,...
- Arithmetic, Population, & Energy And The Crash Course
In Jeremy Grantham's 2nd Quarter Letter, he mentioned the fact that "....population growth is on a direct collision course with increasingly scarce resources." And near the end of his letter he wrote: Well, dear readers, happy thoughts and wishful...
- Jeremy Grantham's 2q 2009 Letter: Boring Fair Price!; Running Out Of Resources
Waiting for Markets to be Silly AgainA year is certainly a long time in markets, and so is a quarter. A year ago, equities globally – and everything else for that matter – were very overpriced, particularly if they were risky. A quarter ago, in mid...