Jeremy Grantham: The U.S. Market Is in a Super Bubble – Morningstar Podcast

It's just a horse race where noble VCs bet big money on their favorite horse and the first 3 horses split all the bets. It doesnt matter that the horses havent eaten for many weeks and dont look well at all. What matters is that there isnt much else to bet on, and because stashing money would get them eaten by moth. Where do the money come from? Caesar creates them and generously gives them to those who have the money already, in proportion to how much they have. What about people who are not noble? They do work for the noble, get a little money and rush to buy some food before moth has eaten their little savings.

This guy is the financial equivalent of the old world street preacher wearing an "end of the world is nigh" placard. Grantham has been saying the same thing every year for as long as I've had interest in markets. He's considered a joke by the vast majority of the educated financial world

Wow, this is awesome - a podcast with a full transcript attached! At first glance I hadn't planned on listening to this, but I am certainly willing to skim the transcript.

Updated: Some very interesting stuff in here. A few poignant quotes from Grantham:

"But in my opinion, we are clearly beginning to run out of resources, cheap, plentiful resources." - on the primary reason for inflation.

"The stimulus program was so gigantic that it flooded into the AMCs and the meme stocks and and helped push this market into the levels that we have seen. And the speculations this time are much the biggest in the history of the stock market adjusted for the size of the GDP."

"[QuantumScape] sells last December--the December before last of 2020--at $130 a share, $55 billion market cap, bigger than GM for a battery research enterprise four years away from any sales, forget profits. Now, there is nothing of that scale in 1929. There's Pet.com with scores of millions, tens of millions, in one or two cases, hundreds of millions. This is $55 billion for a company that has no earnings for four years, no sales. And AMC multiplied by 40, 50 times in a month and becomes, in the case of the other one, GameStop, becomes by far the largest company in the Russell 2000, over 10% of its total, I think, market cap. This is just exceptional craziness."

It strikes me that Grantham is a classic rationalist, a very old school guy who is used to the way the markets have functioned for the past 100 years. However, he just doesn't really seem to GET the change in investing. Meme stocks, cryptos, etc. We live in an irrational, emotion driven market more now than ever before, and I hate to say it, but these old timers don't seem to get the picture and will probably get burned.

It really just comes down to interest rates. The fed tried raising them around 2018 but got spooked. This time around inflation might force them to stick it out. In an ideal world, we would have taken our medicine back then and try to slowly unwind things without the pressure of inflation breathing down our necks. But the combination of presidential influence and the pandemic resulted in adding more fuel to the fire.

I have been cash heavy for awhile though, so my alternate prediction is that things go haywire the day after I give up on trying to save and put it all in the market.

This comment will add zero value to this discussion, but I feel compelled to mention that I always seem to mix this guy up with Jeremy Bentham for a minute or two before realizing why I'm confused.