Money and Finance
- Gmo Quarterly Letter: Just How Bad Is Emerging, And How Good Is The U.s.? And Give Me Only Good News!
Link to: Just How Bad Is Emerging, and How Good Is the U.S.? and Give Me Only Good News!GMO's 3Q 2015 Letter includes Ben Inker's "Just How Bad Is Emerging, and How Good Is the U.S.?" and Jeremy Grantham's "Give Me Good News Only!" ..... [Inker] And...
- The Problems With A Growing Population
Albert Bartlett might have been another obscure physics professor had he not put together a now famous lecture entitled "Arithmetic, Population and Energy" in 1969. The lecture, available broadly on the internet, begins with the line: "The greatest shortcoming...
- Mckinsey Report: Resource Revolution: Meeting The World’s Energy, Materials, Food, And Water Needs
Published in November of last year. It looks similar to the things that Jeremy Grantham discussed in his Q2 letter. Resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth,...
- 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,...
- Barron's Interviews Jeremy Grantham
We do a seven-year forecast every month. On a seven-year forecast, global equities outside the U.S. are boring. They've been so nervous the last year that they mostly reflect the right degree of fear about European problems. Emerging markets and developed...
Money and Finance
Jeremy Grantham's 2Q 2009 letter: Boring Fair Price!; Running Out of Resources
Waiting for Markets to be Silly Again
A 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 March, prices everywhere were cheap. Now they have all – or almost all – converged for a few unusual moments at fair value. A year ago, it was very easy to know what to be: a risk avoider. It was not so easy reinvesting when terrified, but most of us knew that we should have been doing more. But today? It’s difficult to be inspired at fair value.
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What we specialize in at GMO, not surprisingly perhaps, is doing the easy job: we wait for extreme situations and predict that they will become normal once again. When markets sell at normal prices, life for us becomes much harder, perhaps 10 times harder. Predicting movements away from rational prices in an irrational world should not be easy, and indeed it is not. Our one and only effort at predicting a bubble – in emerging markets – is likely to stay just that. Only U.S.
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Behind these two issues, however, lurks another longer-term and more important factor affecting future growth, and that is the increasing limitations on resources: we are simply running out of everything at a dangerous rate. We apparently have trouble processing numeric issues of this kind, and this missing faculty will cause considerable grief. We do not understand the implications of exponential or compound growth rates: the main implication being that they are impossible to sustain.
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It should be obvious from simple arithmetic that population growth is on a direct collision course with increasingly scarce resources.
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This transition away from carbon-based fuels could have been relatively painless on paper, but in real life our species has such a modest ability to deal with distant outcomes or to defer gratification that a bad ending is probably inevitable. We need, it seems, the shock of a Pearl Harbor to really gear up and make sacrifices.
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Well, dear readers, happy thoughts and wishful thinking do not make it so; 30 precious years have passed, and there is now no safety margin. We must prepare ourselves for waves of higher resource prices and periods of shortages unlike anything we have faced outside of wartime conditions. In fact, I believe we are already several years into this painful transition but are still mostly invested in denying it. Everything within the investment business will be affected as well as everything outside of the business.
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Reading and Listening List [from end of Grantham’s letter]
Hardin, Garrett. Living within Limits: Ecology, Economics, and Population Taboos, Oxford University
Bartlett, Albert A. The Most Important Video You’ll Ever See, Arithmetic, Population, and Energy. 2009 .
Martenson, Chris. The Crash Course. 2009 .
- Gmo Quarterly Letter: Just How Bad Is Emerging, And How Good Is The U.s.? And Give Me Only Good News!
Link to: Just How Bad Is Emerging, and How Good Is the U.S.? and Give Me Only Good News!GMO's 3Q 2015 Letter includes Ben Inker's "Just How Bad Is Emerging, and How Good Is the U.S.?" and Jeremy Grantham's "Give Me Good News Only!" ..... [Inker] And...
- The Problems With A Growing Population
Albert Bartlett might have been another obscure physics professor had he not put together a now famous lecture entitled "Arithmetic, Population and Energy" in 1969. The lecture, available broadly on the internet, begins with the line: "The greatest shortcoming...
- Mckinsey Report: Resource Revolution: Meeting The World’s Energy, Materials, Food, And Water Needs
Published in November of last year. It looks similar to the things that Jeremy Grantham discussed in his Q2 letter. Resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth,...
- 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,...
- Barron's Interviews Jeremy Grantham
We do a seven-year forecast every month. On a seven-year forecast, global equities outside the U.S. are boring. They've been so nervous the last year that they mostly reflect the right degree of fear about European problems. Emerging markets and developed...