Interview with Jeremy Grantham of GMO
One of the very few big-institutional guys who has successfully avoided going over the cliff.
Jeremy Grantham, of GMO, has successfully called several major tops in his career — each time, taking appropriate action beforehand to avoid the forseeable consequences. Each time, he has suffered an enormous loss of business as a result. It’s tough even when you are right. Afterwards, when the benefits of his good judgement become evident, he has enjoyed an even larger inflow of new business; but always different clients, not the ones that left him earlier. I found this nearly two-hour interview to be engaging every minute of the way, not only for a few market calls (that we can guess in advance), but for the perspective offered by a career at the pinnacle of big-money institutional investing.
Listen to the May 20201 Grantham interview at Livewire (Australia).
On the low-wage plight of US workers, I found Grantham a bit confused on historical sequence.
He says at about 48mins, that US workers were “screwed” when some 700 million additional workers were added to the global work force during the rise of China and after the break up of the Soviet sphere in Eastern Europe. All this is mostly a post-1989 phenomenon.
Then he segues into US tax policy. “It’s all a question of policy … We’ll lower the taxes on the rich, we’ll take down the marginal tax rates to rub it in, and we’ll lower the taxes on capital … So it wasn’t enough that (US workers) were sandbagged by global economics of China, etc., they were sandbagged by a deliberate … tax policy in the US.”
Is the reference here to the Reagan era “supply side” tax cuts. But that predated the end of the Cold War and the emergence of China. There have been some US tax cuts on capital after the Reagan years, but I don’t think that’s what Grantham had in mind. Anyway, the way he sequenced events is confusing.
Thanks for posting this Nathan. Grantham is a very grounded person. I always enjoy listening to him.