Episode summary
Jeremy Grantham ‘Almost Everything Looks More Attractive Than the US Equity Market’
The Long View
· · 59 min · Hosts: Ben Johnson, Christine Benz, Amy Arnott · Guests: Jeremy Grantham
Summary
Jeremy Grantham argues that the U.S. equity market remains expensive by historical standards and that investors should treat almost everything else as more attractive. He says the U.S. has become even less compelling because it rose further from already elevated levels, while foreign markets such as Japan, Europe, and emerging markets have done better and still look cheaper than the U.S.
He revisits the investment framework that shaped his career: frugality, value discipline, and a strong belief that bubbles matter. Grantham says markets are driven less by forecasts than by current earnings, profit margins, inflation, and stability, which is why he thinks AI enthusiasm and the SpaceX IPO narrative resemble past episodes of speculative excess. He is especially skeptical of the idea that AI hype justifies current valuations, warning that if the claims are right, the social risks could be severe.
Beyond markets, Grantham spends much of the conversation on long-term risks from climate change, resource constraints, and toxic chemicals. He sees falling fertility as a possible escape valve for sustainability, but only if population decline does not become destabilizing. His practical investment advice is simple: question everything you hear and look at the data.
Key takeaways
- Grantham says the U.S. equity market still looks as unattractive now as it did in early 2025, while Japan, Europe, and emerging markets look better by comparison.
- He argues that AI and SpaceX enthusiasm look like classic bubble behavior, and he thinks the market is underpricing the downside if the hype proves false.
- Grantham says valuation discipline should override career risk, even though big institutions rarely tell clients to exit bull markets.
- He believes foreign equities, some long-duration bonds, and gold or commodity-linked assets can make a more diversified portfolio than U.S. stocks today.
- Grantham’s broadest concern is that climate, resource depletion, and toxins are long-term threats that markets systematically ignore.
Notable quotes
“Almost everything looks more attractive than the US equity market”
“I would have that. And then diversify as much as you can in that program”
“Question everything you hear. Look at the data”
“And I would bet at least 90% on the second”
How the episode opens
Please stay tuned for important disclosure information at the conclusion of this episode. Hi and welcome to The Long View. I'm Amy Arnott, portfolio strategist with Morningstar.
Today on the podcast, we're delighted to welcome back Jeremy Grantham to discuss his book The Making of a Perma-Bear, The Perils of Long-Term Investing in a Short-Term World, which he co-authored with Edward Chancellor. Jeremy is the long-term investment strategist at his namesake firm, Grantham Mayo Van Otterloo and Company, or GMO, which he co-founded in 1977. He serves on GMO's asset allocation committee and board of directors.
Prior to GMO, Jeremy was co-founder of Battery March Financial Management, and before that was an economist at Royal Dutch Shell. He earned his undergraduate degree from the University of Sheffield, and his MBA from Harvard University. Jeremy is a member of the Academy of Arts and Sciences, holds a CBE from the UK, and is a recipient of the Carnegie Medal of Philanthropy.
In 1997, he and his family started the Grantham Foundation for the Protection of the Environment, which supports research and action to address climate change. Jeremy, welcome back to The Long View.
Nice to be here. — Thank you so much for joining us today. The book The Making of a Perma-Bear notes that you've always had bad writer's block and struggled with school essays and quarterly shareholder letters. And I'm wondering what your writing process looked like for this book and whether it was any easier.
Well, Edward Chancellor is a professional writer. Couple of really good best-selling financial books, and he's a buddy, and he worked with me at GMO for I think it's like 7 years. And um one of our board members got the bright idea that they should have a book about me.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market bubbles
- ai hype
- valuation risk
- speculative trading
- climate and environmental risks
Companies and tickers mentioned
- SHEL
- Grantham, Mayo, Van Otterloo & Company
- Batterymarch Financial Management
- Shell plc
- SpaceX
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Long View, this episode and its artwork belong to Morningstar, Christine Benz - Director of Personal Finance and Retirement Planning, Ben Johnson - Head of Client Solutions, Amy Arnott - Portfolio Strategist. Octagon is not affiliated with the show; this page is an independent summary.
