Editor's Comments:
Sometimes it feels a little spooky - it is as if somebody or something has a bug on our meetings, conversations, and correspondence. Most likely not, but the coincidence in GMO's thinking is remarkable except for one thing - we would reduce the allocation to stocks even further.
As many of you know we have already called three major corrections since 1999 and are now predicting the biggest collapse ever - by 2050: but no doubt sooner. Why? Well, we won't go into all the details but here are a few of the BIG causes and triggers that are behind our forecast;
Overvalued Meta-Tech stocks that don't make a lot of money or worse. 'The problem with common sense; it is just not so common' - Voltaire
Overextended Federal Debt may cause the US dollar to lose its reserve currency status. Result = hyperinflation- just ask Bosnia, Lebanon, Turkey, Venezuela, et al. This is just poor fiscal and monetary policies - they all suffered the same affliction.
Massive shortages of various agricultural, metal, and mineral commodities, plus fossil fuels that will cause prices to climb dramatically over the next decade putting us on target with the 2040 collapse predicted by MIT in 1972 - ' Limits to Growth.' More inflation.
Climate change and ecocide are going to affect the production of many commodities again adding more pressure to a fragile economic structure. Throw in the growth of populations and migrations to higher consumer-based countries and that too increases demand and thereby prices.
Geo-political situations either have nations scrambling for the last bits and crumbs of natural resources leading to rapid consumption or war of some form. Either way, expect their actions as nations to put more upward pressure on prices.
Cryptocurrencies inherently undermine the value, integrity, and practicality of a sovereign medium of exchange. Think of it this way, today organized tech-savvy crooks are building unlimited sources of digitally branded monopoly money that is being used in exchange for hard assets and services produced by the real economy from concrete resources.
In the end, these snake-oil salesmen can today exchange their pretty digital toilet paper for a new $100,000 Porsche that was made from and by labor and physically depleting concrete objects. The result is obvious - more criminal activity and much higher inflation with lower tax revenues, economic collapse, and loss of reserve currency status. Really stupid.
We could go on a bit more - but the writing is CLEARLY on the wall and the stage is being set for markets and economies crashing 75% or more by 2040 (MITs forecast date) due to hyperinflation, currency status/value loss, overpopulation, excessive valuations ( caused by Goldylocks interest rates for far too long,) and finally, a massive shortage of all major commodities ranging from peanuts to lithium to fossil fuels that cannot possibly satisfy the basic needs and the food required by an ever-growing population The math does not pencil out.
What is thus plainly self-evident is - it ain't going to be pretty in the near future.
T A McNeil
CEO Founder
First Financial Insights
Business Insider: GMO trimmed mega-cap tech stocks last quarter as Jeremy Grantham sounded the alarm over a coming market crash
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As Jeremy Grantham continues to warn about the imminent threat of a stock market crash, the asset management firm he co-founded is making trades that partly reflect that view, Business Insider reported.
GMO, which had just over $62 billion in assets under management at the end of 2020, trimmed its stake in mega-cap tech stocks last quarter while it bought more traditional value stocks like AT&T.
But Grantham's resoundingly bearish view on the US stock market doesn't automatically translate to a portfolio that is positioned defensively if a crash actually does occur. That's mostly because GMO offers several different mutual funds that have a specific mandate to follow, and owning stocks is often part of that mandate,
Business Insider said.GMO reduced Alphabet (GOOG), Pfizer (PFE), Meta Platforms (FB), added to Taiwan Semiconductor (TSM), Discovery (DISCA), AT&T (T), and Vipshop Holdings (VIPS). The asset management firm counts Microsoft as its top holding, followed by Apple, United Health, and Coca-Cola, Business Insider said.
