Jeremy Grantham Lessons From 60 Legendary Years Of Investing

TITLE: Jeremy Grantham: Lessons from 60 Legendary Years of Investing CHANNEL: The Master Investor Podcast with Wilfred Frost DATE: 2026-04-20 ---TRANSCRIPT--- I don’t think of it as timing the market. I think of it as getting out of clearly overpriced stocks and concentrating always on the ones that are cheap. And every time you buy a small stock, you could say, “Oh, you’re timing the market. You’re timing that stock.” Are you? Or are you just in the long run always going to win eventually if you own the cheaper stocks? And so do not stand your ground in in badly overpriced stock markets unless eventually you want to take it on the chin. And of course in the meantime other people are outperforming you. But in the longer run you win. Has there ever been a more dangerous environment on every level as we began to talk about every level? Population bust, climate change, geopolitics, trade war. da da da dam actual live war uh in in two or three places and um things you know things can get really bad in a real hurry and and how does the market reflect this I’ll tell you by having one of the two or three highest price markets in the history of business and if you think the future looks one of the two or three best futures that we have ever had in the last 100 years. You’re smoking dope, right? This is a fraught, dangerous, growth limiting world. Welcome to the Master Investor podcast with me, Wilfried Frost, where we celebrate and learn from the success of the greatest investors, business leaders, and politicians in the world, giving you, our listeners, the edge. The Master Investor podcast is sponsored by Else Interactive Brokers. the World Gold Council and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. My guest today, Jeremy Grantham, is a true investment legend. He founded and led GMO for many decades and remains their long-term strategist. At his peak, they managed a staggering $150 billion in AUM and oversaw some consistent extended periods of enormous outperformance during his 60-year investment career. Famously, Jeremy of course predicted all of the major stock market bubbles of his six decade investment career and often the corresponding rallies as well. Jeremy, welcome back to the Mass Investor podcast. This is our fourth interview. We did two on CNBC. Oh,

yeah. Uh one obviously on the podcast so far. It’s great to see you in person. Nice to be here. And uh and and welcome back to the podcast. And and I I have to object to predicting. I didn’t predict the bubbles. I said that they had arrived when they arrived. But they had if I could predict them coming out of nowhere, that would be that would be very handy. All I can do is wait until they appear, they always seem pretty darn obvious. And uh say, “Look, there it is.” And you’re you’re absolutely right to correct me there. And I’m sure you’re going to be correcting me a lot through this, which is what I look forward to so we can share in your wisdom. Um, I wanted to begin Jeremy by g getting into your mindset uh as a person and and how that led to the type of uh investor you are. I have so enjoyed reading the making of a perma bear, the perils of long-term investing in a short-term world, which was published in January this year. Um, and I’ve learned a lot about you personally in it that I that I didn’t know before. You’re a pre-war baby born in 1938. Uh, your family were Quakers and you’re a Yorkshireman. And I love how all of those things together you point to gave you the appreciation for finding good value. You wrote that every Yorkshire worth his salt is born with the natural understanding that cheap is better than expensive. I think that’s fair to say. You also talk about your butterfly effect, how your ideas and thoughts flit around the garden like they have no concentration. Tell tell me what you mean by that and why that is important in why you you were such a great investment thinker. Well, it’s probably self-justification. I have a hard time spending too long on a given topic and tend to move on much to the irritation of my colleagues usually onto a slightly different topic or a completely different topic. But the the thing is I’m quite persistent. So after a little bit I come back and anyone who’s got any interest in gardening will notice that that is exactly how butterflies work. You think they’re just here and gone but they’re not. They can stay around for a day or two and they’re constantly coming back to the same flowers and then off they go. They don’t spend long on a given flower but they keep coming back. And I have found that that is exactly the way that brainstorming should proceed. If you hammer away too earnestly, which is a tendency, oh stay on topic, stay on topic. And in fact, what happens is you just get stale. You’re beating your head on the wall and it’s no good to anybody. The worst thing you can do is stay on topic. You know what the topics are, take some time out, wander around the periphery a bit, come back to the original, and when you come back, your brain is a little open. You have an insight maybe with any luck and and just do not hammer away. It’s seen as a virtue, and I think it blocks the creative juices. You you also wrote in the book, very hard work does get in the way of thinking because you’re so busy shoveling in new data. You have little time to really think. Do investment professionals today spend too long in the Excel spreadsheets or or perhaps in the the AI building models today, but rather than What do you mean by really think? It’s not it’s not typing numbers into a spreadsheet. No, it’s walking across Boston Common and having a shower that before you go there and just thinking where are we? What’s going on? What am I working on? Let the brain travel at a convenient walking speed and uh see where it goes. I used to reckon that by the time I’d arrived at work in the good old days, of which there were maybe about 30, I would I would have um I would have had two or three ideas. Mo mostly, according to my colleagues, pretty silly ideas and I was blessed with with a colleague Chris Darnell who was the only human being who could persuade me that an idea was idiot in about 20 seconds. uh Ben Inca can do it in 10 minutes or an hour and no one else can do it period. I’m very hard to convince, but uh Chris could do it so fast that I’d hardly got my brilliant new idea out. Then I was, “Oh god, how obvious.” And uh that combination is absolutely formidable. By the way, have have someone who’s got lots and lots of ideas, mostly ridic ridiculous or superficial, and one guy who is a idea u destroyer who just looks through, points out the fatal fallacy, and and you move on. and we would go through 10 or 20 ideas to find one to put into the pile for further research. And and on that note, you say again another quote, I’m going to throw lots of your great quotes from your book, Jeremy, at you during this interview. I hope you don’t mind. Another one saying getting the big picture right is everything. One or two good ideas a year are enough. We we’ll come to some of the scale of your outperformance in a moment, but it’s really just one or two a year that lead to that investment legendary status. Yeah. And there’s plenty of years I would have settled for one um and didn’t get it. But um if the idea if the level you’re thinking on is fairly high level, you know, are short are small cap going to win this year? You don’t need to hit too many. Just knowing that small capper on a role might be a single idea that will power you through three or four years of out performance. And when you get it right, it isn’t even that difficult. You can’t really implement it badly enough not to win if you if you get the the big ideas right. This episode is sponsored by the World Gold Council, the global experts on gold. They champion gold as a trusted strategic asset, provided marketleading research to help investors understand gold’s role, and modernize how gold is owned, traded, and used, developing industry standards and market infrastructure. Learn more at goldhub.com. in terms of narrowing down and there’s too often generalizations used and labels used in investing, but narrowing down the type of investor you were. The the the real winner, if I’m right, for you was it was basically a dividend discount model with your adaptations that that you guys made to it. But that was at core what you focused on. Yeah, I wouldn’t I wouldn’t call that an idea. It was just how we measured the the quality of our other ideas. We would uh every every stock would have a dividend discount uh ratio. What ratio of fair value was it? 79 you were, you know, 21% cheap. 1.12 you were 12% overpriced. And then we add them all together and it turned out that the sum of all the small ones was very cheap. The sum of all the big ones on average was very expensive and so on. And uh it it gave us a measuring kit uh to test whether our instinct was right. And um very handy and and clearly therefore you know you weighed up the value and that was much more your focus than was other factors like growth and momentum. But uh I guess you had an appreciation for the importance of those other factors. I I I kind of you had quite a long set set of chapters on on this part of the book which I really enjoyed. And stepping back from it all, it was almost as if you begrudgingly accepted that momentum was a significant factor. No, I actually I have a sneaking respect for anything that works, however ludicrous it may be. And and of course, momentum is a pretty simple-minded inefficiency. it really shouldn’t work. And it’s worked pretty well, I’m sure, all my investment career and a lot before. And and it still works in many forms. And it just says, you know, a body in motion tends to stay in motion for a while. And um I remember when the market efficiency guys were saying there is no information in pricing alone and random walk down Wall Street guy, Burton Malchio. And if the day he said that you had looked back 20 years and you had asked the profound quantitative question, hands up, who did best last year and you took the 10% best, they outperformed by three or four points the following year. Information in pricing alone, he was completely wrong and provably wrong for for the last 20 30 years before he said it. But academics can be like that. I think the biggest inefficiency was always quality. you know, quality has uh less debt, higher returns, more stability, go goes bankrupt less. However you torture the data, you can’t persuade anyone that quality is a risk factor. Is the higher the quality, the lower the risk. And yet quality outperformed. It’s outperformed forever. And uh it should be minus a point, right? A year. The AAA bond underperforms, you know, the B bond by about a point a year. and the AAA stock should do the same for the same reason, less risk. And it didn’t. It outperformed by about half a percent a year. So there was a freebie return and an inefficiency of about one and a half% a year. You were paid for the privilege of owning uh the big highquality stocks and um the academics went for decades without picking that up and making a fuss about it. So you referenced there they went for decades without picking at that up. Um so so have markets gotten more efficient over time? Has your job gotten harder or not? No. As my career went on, I tended to gravitate to bigger and bigger issues starting with stocks and then sectors and then markets and so on just because I I found them a bit different and more interesting. And uh the critical critical question is are the are the magnificent inefficiencies the bubbles uh where ridiculous meme stocks go go up uh six times in in in a year. Are are they more now than they were? I would say if anything a little worse than they ever were. In terms of your investment approach, this quote jumped out to me. We never made tons of money without taking painful losses beforehand. You need to have the confidence to hold your positions when it moves against you and to increase your waiting as it gets more attractive. Value gives you that confidence. I mean, we we’ll come to some of the more painful bits of your underperformance in a moment. But if you’ve done the work and you’re confident in your position, I guess you can see through those moments in time. But it but it must have been very tough. No, it is tough. Um and and you do have to believe the data. And and the catch 22 really is that if you want to have a three sigma bubble, those super colossal bubbles that have occurred once or twice in a 100 years, you don’t get there overnight. You get there via a pretty substantial bubble that of the kind that you see every 30 years. And you don’t get there overnight. You get there via Yeah, it’s a bubble. It’s it’s a two sigma event, the kind that occurs every 15 years. And if you want to make real money, you have to go from overpriced to very overpriced to oh my god, extremely overpriced. And from that point, you make a fortune. But by that point, you have taken a lot of grief. You know, you bought it when it was cheap. The market moved against you by 50%. You’re now cosmically cheap. And it’s from those points, 1929, 2000, that you go down a lot and you outperform the market by an amazing amount if you’re in the right place. In 2000, there were plenty of places to hide. The market went down 50%, our portfolios were up quite nicely over the three years. Well, kudos to you to to seeing it through as you did so many times against, you know, Well, they’re not many when you think about it, you know. Three or four. Three or four. Well, I’m I’ve been in the business for 60 years. That’s true. That’s true. But but but you know, particularly in the in the run-up to the the dotcom busting you describe in the book, you know, losing a lot of the clients, um some personal uh positions as well that you had that that cause pain. Um another couple of quotes before we get on to some moments in history to to reflect on just on your broad investment style. And I love this because, you know, so many people say it’s impossible to time the market and, you know, I think it it kind of is on any individual stock, but again, I love the sort of bold positions you take. And you say market timing, in my view, is a disparaging tag used by some buy and hold investors to put down anything that involves using your brain. These are the same people who watch the locomotive coming down the tracks and in the name of discipline get run down. And I mean so timing the market is something for those big asset allocation uh decisions in particular once a decade or so rather than daily on an individual stock you believe you have to try and do. No, I don’t think of think of it as timing the market. I think of it as getting out of clearly overpriced stocks and concentrating always on the ones that are cheap. And every time you buy a small stock, you could say, “Oh, you’re timing the market. You’re timing that stock, are you? Or are you just in the long run always going to win eventually if you own the cheaper stocks?” And so, do not stand your ground in in badly overpriced stock markets unless eventually you want to take it on the chin. And of course, in the meantime, other people are outperforming you. But in the longer run, you win. Um, on that note, your performance throughout, as we know, those of us that are in the business or study the business know, was was outstanding. The scale of it across a couple of the decades I had underappreciated. So, six out of the eight years when you’re at Battery March uh, outperformed. One of them was in line, one of them was behind. And then your first nine years at GMO after founding it, you outperformed every single year with an annual outperformance of 8% perom. Yeah, that’s right. 8% perom. 8% perom. So that run of performance which was you know double your money by the way. 8 9 to 72. The rule of 72. So, so that run it came those years I just outlined was up to

Was was that the best moment? There was some great moments but that that is 8% perom for nine years.

Yeah, that in in a way no it isn’t unheard of. Warren Buffett has done 9% for a whole lot longer. And that actually it’s that statement that makes me realize how good that sucker is. I mean that in our best eight years out of 60 years of trying, I’m sorry, best nine years, um, we couldn’t quite equal his 45 or 50 year average. That was pretty dismal. Wait a minute. It’s 35 40 60 years. Cheapest creepers. 60 years of averaging 9% and we can muster nine years of adding eight. It’s not dismal. No, it’s not dismal. It just is a recognition of how remarkable Warren Buffett’s record has been. Whilst you mention, is he the greatest full-time? Why is he so good? In terms of adding percentages to basically a buy and hold portfolio. Yeah, I guess he has no rivals that I can think of. Um, I’d have to say there are other measures out there who who who has been the most useful. Of course, it’s Jack Bogle because he gritted his teeth and kept driving that idea of indexing through 30 years of little interest and then finally the internal logic there’s a power of the logic of that idea begins to take over and u you know to have an organization whose Christmas bonuses depend on how much money you save investors this is a pretty far cry from what everyone else was doing. So yeah, Warren Buffett gets gets the medal for uh making money, a simple entertaining goal. And uh but Jack Bogle gets the medal for doing the most useful thing in the investment business, saving millions of people, billions of dollars, perhaps even more. But Jack Bogle credits you which I was hold my hands up unaware of the impact you came up with the idea of indexing before him. Yeah. And he gives you that credit which you always together with Dean Learon. This episode is sponsored by Interactive Brokers. Building wealth starts with the right broker. and interactive brokers helps you reach your goals with powerful tools, global market access, low costs, and unmatched financial strength. That’s why the best informed investors choose IBKR. Learn more at ibkr.com/master investor. Hey guys, Wolf here. I wanted to flag Jim Melon’s upcoming Master Investor Show on the 25th of April in London in person. It’s always a fabulous event with 5,000 investment enthusiasts like you expected to attend loads of panels and speakers, including me on the main stage at lunchtime interviewing Jim Melon. Visit masterinvestorshow.com to register or check the show notes for a special link and discount code to register for free. I wanted to now focus you on a couple of particular moments in in history uh and bubbles that that were formed starting with 1999. You are talking about how a client was giving you a lot of grief because you guys had identified the the bubble early and uh and taken a more um anti-risk approach and and therefore were underperforming for for a number of years although making decent money by the way beating beating the long-term pension fund targets um perhaps as much as 7% a year. Mhm. But the market was u 13. Right. So you you were identifying that and this is this is what um the you said you were pushing back to the client by saying you said I went over the pitch. I described how cheap some of the nooks and crannies of the market were how inflation link bonds yielded 4% uh how regular bonds yielded handsomely. Value was off the scale and as cheap as it had been in 1974. REITs sold at a discount to their NAV and so on and so forth. Could you apply all of that to today as well? No. 2000 was wonderful because it gave you many places to hide. The REITs real estate sold at a discount to building the building. REIT sold at a discount to the properties they had bought. They y the 9% you must be joking. Right at the top of the market when the S&P was down to a yield of 1.6, 6, which you had never seen such a low level even in 1929. And and there it was. I mean, small cap was was cheap. And then you have other markets um like the housing bubble of 2007, almost nowhere to hide. That was a a risk bubble. Everything risky was overpriced. There were no obviously cheap assets in in in ‘08. Now this one is in the middle. This is th this is happily quite like uh 2000. So you have half the bubbles have great alternatives to the US market. Half of them do not. half of them represent a general tendency uh to uh to all go together and um and some of them and some of them do not. And and this one I remember at the beginning of last year saying in a podcast that uh we had nothing against non- US equities. we wouldn’t touch the US equity market, but the rest of the world, emerging markets, European stocks, Australian, Canadian, the the rest of the world’s equity markets were extremely reasonable. I in terms of one sort of similarity to

1999. Um I I guess it was another decade where a lot of people were talking about the potential boost in productivity and with it the potential boost in GDP that that might come from a new technology the internet then uh AI this time round. Talk to me why that was a foolish point of view to have because in in all of the work you’ve done, GDP growth itself and productivity growth itself doesn’t in fact necessarily correlate with with strong equity returns.

Yeah, there’s there’s been no easy uh relationship in the past between high price markets and and the growth in the future. And and that’s what it gets down to, right? And and in every bull market they say the future must be wonderful otherwise the market wouldn’t be so high priced and it’s quite the reverse. If you say what are the three or four terrible times they are not randomly distributed they are precisely following the great bubbles. So the great depression precisely follows the 1920 famous 1929 peak and Japan’s last 10 years lost 20 years precisely follows that amazing 65 times earnings in 1989. There’s no example of a high PE predicting higher profits, higher growth, higher productivity in in history. What they do predict is tough times. And if ever there was likely to be a case of that, it’s now. You know, we’ve everything has been done wrong. We’ve taken wonderful um post-war growth in international trade and done our best to mess it up with tariffs and trade war and um done our best to destabilize geopolitics, our relationships with Russia, China, and so on. Uh I’m sure they’ve been worse with one or the other several times, but to have both of them at the same time, this this is distinctly uncomfortable. And then we have the long-term climate change, which up until two years ago was something you you talked about, but no one listened. And now in the last two years, the billion plus damages, floods and droughts and fires are so thick and fast that they they may be knocking half a percent off global GDP and they’re getting worse all the time. Then you have the population beginning to decline um in in some countries, Japan, South Korea, China, um all dropping like a stone and and they’re going to do it as far as the eye can see. So, the world is going to have to get used to slower growth in the workforce. The declining populations, it’s a factor we talked about at length in our first episode, and I referred people back to that and and the bonus episode in particular. We touched on a lot of your long-term risks. This episode is brought to you by Else, the leading global financial markets, infrastructure, data, and analytics provider. To learn more about how Else connects businesses, investors, and markets worldwide, visit elg.com. You mentioned there the worst thing geopolitical situation which brings me to one other comparison I wanted to to touch on this. You wrote about the 1970s um talking about 1973 in particular market the market hates high inflation and weak profit margins. You wrote when those two factors become extreme the market should sell at seven or eight times earnings and it did. At the trough, the S&P 500 was down 55%. Again, talking about the 70s there, 1973 specifically. I picked that out just because of the situation of the last six weeks. Are you reminded of some of the challenges of the 1970s as the Iran war has kicked off and the obvious impact on oil prices and inflation? Yes, I think we as a species have a tendency to think happy thoughts. We we do wishful thinking extremely well. I believe it’s a survival characteristic. I think that pessimists that this was not a good survival characteristic for 150,000 years. And so we’ve kind of bred out the real pessimists mainly. And and so we’re a very happy thinking species. And certainly if you studied the stock market now and forever, you’d conclude that given half a chance, we will generously interpret the future and say how good things will be. If the economic data is bad, we say whoopee. This will give an excuse for the Fed to cut rates and the market goes up. And if the economic growth is good, we say whoopee, profits will be high and the stock market goes up. So it’s always looking for an excuse to be cheerful and and overexlain the good news. We tend to extrapol extrapolate. So if if the conditions are good, I get that. They extrapolate them forever. So 1929, you had perfect economics in the summer of

29. You extrapolate that forever, you expect human behavior being what it is, you’ll have a ridiculously high PE. And then in 2000, the great profit margins, highest in history, multiplied by 35 times earnings. Again, you must be joking. So you had four times book. And from four times book, you can only expect what you got as you could in 29. I mean, this is not rocket science. It they are very very obvious. The question that one should focus on most of the time is and how come that isn’t on the front page and I’ve tried to answer that in the book that it’s not a business strategy. Any big corporation in finance has to tell you that everything is fine all the time and and go over the cliff together uh and then make as much money as they can sorting things out. And that’s what they do. You will never have the Goldman’s, JP Morgans’s, Morgan Stanley’s are never going to tell you to get your tail out of the market because it’s dreadfully overpriced. And they can see that it’s dreadfully overpriced. So, dear viewer, do not think because no one serious is telling you to sell out that this means the market is reasonably priced. It simply does not.

On that note, tell me about the analogy of a feather that you came up with. You you stand on the top of a high-rise in Miami in a hurricane and with a bag of feathers and you throw them in the air and and some of them will land within half a minute, you know, a block away. And some of them will be swept up to Maine in in 8 days like some poor um songbird from the Caribbean. They just get caught up and they can’t get out. And um but you do know something with absolute confidence about those feathers. Every single last one of them. They will all hit the ground. So that’s a classic example where you know something with absolute certainty in the long term but absolutely no certainty about the short term. And even though the short term is followed by another short term, it’s followed by another short term. Nevertheless, you know with absolute certainty that certainty that sooner or later the gravitational effect will win. And for me, value is a gravitational equivalent. Sooner or later, being cheap has consequences. Being expensive has consequences and it will eventually wear you down. However much you’re to the moon, to the moon and you’re winning over a month or two, eventually value will out. This episode of the Master Investor podcast with Wilfred Frost is sponsored by BMY Investments, a trusted partner for many, delivering financial solutions to investors and institutions worldwide. This sponsorship does not constitute financial advice. Let’s focus in on today’s markets with all of that in mind. Jeremy, um, this book was published in January. Obviously, you formed a lot of the ideas and and conclusions in it, you know, throughout the year or so leading up to it. Um, in the book, you talk about the conditions that are needed for a bubble to ultimately burst. There’s lots of them in there, but I wanted to read this particular one because as you describe it as, it’s the strangest condition of all. You say this, the strangest condition of all when the previous highbea market leaders turn strongly down yet the market led by blue chips continues strongly up. This very strange condition only happened in 1929, 1972 and 2000 uh and never in between. I guess in the last few months we could say that the MAG 7 has rolled over and yet the rest of the market has held up quite well. Would would you add late 2025, early 2026 to that list of when that has occurred? May maybe I should. I I haven’t. I’ve been too busy, I guess, doing book tours. But uh what I would add to that list was uh uh 21 and we had a podcast together in 2021. 2021 um everything that didn’t have earnings and wasn’t substantial that had done so well uh the previous year I mean magnificently off the low the COVID low had started to go down and that was classic and that gave me the confidence to write uh um let the wild rumpus begin was the name of the quarterly letter which is only the second time in my life I’ve used language that said anything about timing and gratifyingly the S&P tanked. Worst bond market year in history ever. Um S&P down 25, MAG 7 down 40, growth stocks down 35. And then in um late October or whenever it was um chat GBT comes out and it didn’t stop the rest of the market from being wobbly. uh they continued to drift off uh for another 10 months, but the MAG 7 went up so much that and they were so big already that they they they took the S&P with them. And then after 10 10 months, the S&P general uh decided they would uh throw in the towel and become bulls. And the question is how would the economy have been if we hadn’t had the um the frenzy of investing in um in AI? I mean it it it compares with the railroads. It’s just massive and it changes the economy. And secondly uh a lot of money was made that would not have been made without it. And animal spirits are very important. So you had a kick up in animal spirits and you had real help on the capex end from AI investing and without that my guess is we might very well have tipped into a mild a mild or moderate recession not a serious one I suspect and and the market instead of stopping down 25% the S&P would probably have gone down maybe 40 or more and we’d had a real bare market. So this is the first time where something as powerful as AI um you know it’s like someone discovering the railroads in in the middle of 1930. It would have been it would have been a different world and it had never happened before and it will probably never happen again but it uh it nipped. So I I suspect that that indicator had worked once again and I suspect that right now it’s it’s not a fullyfledged indicator. One of the problems here is the MAG 7 are highquality companies. So that scrambles the data. Uh it’s clearly not a picture where the strong safe companies are doing well and and uh the racy specs are doing badly because uh the mag 7 are mostly closer to being big quality stocks than they are to being flaky junk, aren’t they? So that it’s a harder world to to figure this out. Now, it’s interesting because I guess I I’d sort of thought since October, which is roughly, you know, one of the highs recently of the MAG 7 and the market holding up more broadly, people talk in a bullish sense, the market is broadening out as a positive factor. Reading your book, it almost turned it on its head for me and made it thought this is actually a negative factor. It’s it’s the the final the last harrah before the market collapses. Yeah. Well, let me let me just say I am now going to go back and and and get some help and and go through the data and and the downside uh of of my job description recently is I’m not on top of market data as much as I used to be. And uh the these are not easy issues. They’re quite complicated. And uh I think there is a possibility that there’s some information in what you say uh that they have begun the leaders have begun to lose a bit of steam and and of course you could argue that the market was broadening in each of these in in the late stage of 90 29 um the flakes were getting hammered. The ones who’d gone up 80% in 28 were down in 29. And you could say, “Oh, well, that’s because the the breadth has picked up and everyone’s doing well.” I I think the phenomenon has a lot to do with Mr. Prince saying, um, as long as the music’s playing, I’ve got to keep dancing. What he didn’t add is, “But I don’t have to dance uh uh with Pumatech, the most advanced stock in 99. Um, the market is so crazy high that even though I’ve got to keep dancing, I think I’ll start dancing with Coca-Cola. Thank you. Because come the end of the world, it won’t be as painful. If I dance with Pumatech, I might go out of business completely. And uh I think that’s what causes the phenomenon. And I think it’s um probably more right than wrong and easy enough to understand. And and just on circling to the Iran war stuff again since the start of the war, the NASDAQ 100 is actually up 1%. Um after a rally last week on ceasefire hopes which which now might be a bit a bit weaker oil prices are up 50% odd. Yeah. Can that hold? Obviously uh every major move in oil up has caused a recession without exception. Just check it. And uh we can withstand a lot of things but we can’t easily withstand a massive increase in the price of of critical fuel. it can’t be done and um in a sense not nothing is ever sustained but but that is uh clearly uh painful and and will create u balancing effects market gets weak demand gets less etc. Has there ever been a more dangerous environment on every level as we began to talk about every level? Population bust, climate change, geopolitics, trade war, actual live war uh in in two or three places. And um things, you know, things can get really bad in a real hurry. And and how does the market reflect this? I’ll tell you by having one of the two or three highest price markets in the history of business and if you think the future looks one of the two or three best futures that we have ever had in the last hundred years you’re smoking dope right this is a fraught dangerous growth limiting world now I I grant you AI is wonderfully complicated with the with the caveat that nobody from Nobel Prize winners all the way down you have never seen such a divergence of opinion. Sometimes the Nobel Pri prize winners think one thing and the rank and file think the other. But this is every at every level opinion is split. It will bury us. We’ll lose all our jobs. It may build a car. It may drive a car. But it will not buy a bloody car. that. So you’re absolutely profoundly going to unbalance supply and demand here. And we are ask anyone who deals with commodities. Supply and demand when in slight imbalance and the price of copper or the price of natural gas will go through the roof or or collapse. And you’re now, for the first time I can think of, you you’re beginning to play games with the balance between supply and demand of human beings and and and consumption and the marketplace. And that’s why no one knows. On paper, you can you can dream about huge productivity gains, but if those people are just sitting on the beach, what is the use of those productivity gains? Anyway, it’s it’s infinitely complicated. And on top of what is already a complicated world other than watch your tail, I think there’s no material chance that it will overcome the long list of problems. It it will mitigate some, it will be brilliant for some and it will generate its own its own set of problems. And uh I I think it’s a very very dangerous time that we’re living in from an economic point of view, from a stock market point of view, from a social point of view, and just from a geopolitical point of view, from war. Um and and should we really be reflecting this with the highest price market in history? It it seems classically illogical, but that was the case in 1929 prior to the Great Depression. Two final questions for me, Jeremy. the first it’s taken us a while to get here so I apologize for this but you know we’ve often focus on you calling the or observing the tops in markets but you’ve you’ve clearly done it brilliantly the bottoms as well otherwise you wouldn’t have had that outperformance that we reflected on earlier to the day you did it after uh the 2009 low March 2009 um it might have been to the week only but the Wall Street Journal refused to uh publish the letter you sent into them. Well, I didn’t get around to studying it either. Yeah, they didn’t get around to publishing. I don’t think they refused it. They had they didn’t read read it. They hadn’t read it. It hadn’t gone into the paper such that when you then published it yourself a few days later, it literally marked the day. It was the day. Um and you know, famous famously you you told people that stocks had gone incredibly cheap and they should go out and buy them and and it was a great great call. Um it’s called reinvesting when terrified. reinvesting what and it makes the point if you’re not terrified you’re not paying attention. It it wasn’t that I was arguing with their terror. It was that I knew that terror from 1974 where merely getting your body to work was hard. You know, left foot forward, right foot, oh god. And it we called it terminal paralysis. The market was so bad, so crushing that you could hardly think, let alone have a battle plan. And we were beginning to get like that in in ‘09. So get a battle plan. I argued it doesn’t matter if it’s a bad plan, but any plan will be better than paralysis. And this is what you write about. I mean this read the whole memo, but this line jumps out to me. Be aware that the market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before. And and That’s very hard to convince yourself of I guess in the moment. Yeah. What was And it accounts for why no one in general picks the bottom or the top. Picks it up or the top for that reason. There might be other reasons. I I say in the book that this is the kind of thing you get right every one or two lifetimes and I get one which is reinvesting and terrified. I’m very happy to have one. I didn’t expect anymore. What what was the the PE that highlighted to you or or or other met valuation metric that you must to be very close to that level if if if we get that again after the next pullback. Yeah. When when it might not be the perfect bottom but it’s enough that you say guys go out there’s not that much downside left. Yeah. No, that that low could have been even lower. By the way, it was 666 on the S&P. So the market is now up more than 10 times. Not bad, eh? And and we did it on our dividend discount model which just said on our data, the market seems priced to deliver handsomely over its long-term average. I think it was 12 real for the next seven years. So we had a seven-year forecast. It was priced about as high as it had been. It was the the highest price on our seven-year forecast for 22 years. And um and I I believed then and now that the market was not going to be quite as cheap as it had been in the in the 70s and so on. So even though the PE had been quite a lot lower in ’ 74 and 82, I didn’t think it was likely to get there. Possible, but unlikely. And so I was happy to to to call the the game when it was just very cheap. Mhm. Um it reminds me as well to to check on the title being the making of a perma bear. It’s almost as if perma bear should be an inverted commas. I voted for it. Did you? I did. I voted for it and and and they I lost that battle and a few others. But um that’s I know that the subtitle is is the perils on target. The perils of long-term invest. That is amazing. I had that thought as well. Um my my final question, Jeremy, we really are out of time. I’ve kept you for longer than than we should have done, but um you you reflect towards the end of the book on President Eisenhower’s departure uh speech and how everyone dwells on military comments given his background. uh and uh well mil beware the military-industrial complex. I mean give me a break. That is an amazing thing for a president to have said. It was and and then this line as well though is the one I picked out because it surprised me. And you were observing that people don’t focus on this one enough which was to say as we peer into society’s future we must avoid the impulse to live only for today plundering for our own ease and convenience the precious resources of tomorrow. We can’t mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. Wow. It is amazing, isn’t it? Isn’t it a great speech? There has never been a comment on on the topic of living within our means. No president since then or before has come even close. Not the ones you like, not the ones you dislike. Not even close. The It was remarkable. And and the saddest thing of all is he starts out by thanking both sides of the house for their constant and considerable cooperation. Holy cow, what a great final speech he gave. Jeremy, this is a fantastic book. I really enjoyed reading it. I’ve really adored catching up with you again in person and uh I thank you once again for joining us on the Master Investor podcast. Thank you. What a pleasure. Uh Jeremy Grantham uh of course founder of GMO, author of making of a perma bear in inverted commas should be uh up next on the Mass Investor podcast will be Stephanie Link. Make sure to hit follow or subscribe if you’ve not done so uh already and our thanks again to Jeremy Granthm. Thank you. The Master Investor podcast is sponsored by Else Interactive Brokers, the World Gold Council and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. This podcast is produced by Paradine Productions and Master Investor Limited in association with Birdline Media. If you’ve enjoyed the show, please do subscribe on YouTube or click follow on your podcast platform and you’ll be automatically notified each time a new episode drops.