Legendary investor Jeremy Grantham ramps up market alarms with long-term gloom; ‘Nature is beginning to fail’

• In an interview with Bloomberg, Jeremy Grantham added to his earlier warnings of a market crash and pointed to climate change.
• Grantham believes markets will face a future of high inflation, slow economic growth, and labor shortages.
• “We’re going to live in a world of bottlenecks and shortages and price spikes everywhere,” he said.

Jeremy Grantham has repeatedly warned of a US “superbubble” and an epic crash, but now he’s ringing the alarm bells louder by pointing to several factors converging at once, including climate change.

In an interview with Bloomberg, the GMO co-founder predicted the “Goldilocks” era of the past 25 years is coming to a close. He expects the near future to be a period of high inflation, slow economic growth, and labor shortages.

“We have been checking off this list [for a superbubble] all year,” he noted. “The Nasdaq has started to weaken relative to the blue chips. The Russell has started to weaken… Today I feel it, it is just about nearly certain.”

Grantham, who has predicted the last three market bubbles, previously said he is confident that the S&P will crash 50%, similar to the bubbles of 1929, 2000, and 2008. The current market resembles the fourth superbubble in US history, he said, and the “wild rumpus can begin at any time.”

To be sure, Grantham has been issuing similar warnings for years, during which time markets have soared. But now he is voicing even stronger confidence than before that an epic crash is inevitable.

“This has been exactly how the great bubbles have broken the blue chips,” Grantham said when asked about the historic 2021 market gains. “In 1929…the year before [some stocks] had been up 85%. They had crushed the market.”

The 83-year-old investor noted that environmental concerns would also contribute to inflationary pressures and shortages, and will make for a troubled investor landscape.

“There’s only a certain amount of cheap oil, cheap nickel, cheap copper, and we are beginning to hit some of those boundaries,” he said. “We’re going to live in a world of bottlenecks and shortages and price spikes everywhere.”

The scarcity of raw materials will make farming more difficult, which will coincide with other bearish trends like geopolitical tensions, retiring Baby Boomers, and declining birth rates. These factors pile on to a century’s worth of rapid economic and industrial growth.

“We have simply shot way beyond the long-term capacity of the planet to deal with us,” Grantham said. “Nature is beginning to fail. And in the end, if we don’t fix that, we begin to fail as well.”