10 views on the market from Jeremy Grantham
How corporations are helping to lower GDP growth
Mr. Grantham writes that the tendency for corporations to sit on money or buy back stock is serving to “create shortages, drive prices up, and, as a by-product, lower job creation and GDP growth.” He then goes on to add that if the U.S. doesn’t invest, others will “and it will, in the longer run, definitely end badly.” He also notes that it is still better to own cheaper assets even in a lower-return world. Finally, “it behooves buyers of ‘cap rate’ type assets like real estate to realize that the current low rates are flattered by current Fed policy, which will, like everything else in life, pass away one day, leaving them looking overpriced.”
Source: GMO's 4Q letter
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