market folly

It's been a while since we last checked in on GMO's Jeremy Grantham so today we wanted to highlight his Q3 2012 letter: "On the Road to Zero Growth."

In it, Grantham examines GDP growth rate, slowing population growth, productivity, and reduced capital spending.  He concludes that,

"With a little luck, U.S. GDP growth (even after an increasing squeeze from rising resource costs and environmental damage) should remain modestly positive, even out to 2030 and 2050, in the range of 1% at the high down to a few basis points at worst."

Grantham doesn't offer any investment advice given the scenario he laid out, arguing that it's a complicated set of short-term and intermediate-term consequences.  It sounds like he'll address that in his letter next time around.

Embedded below is Grantham's Q3 letter:



We've also highlighted some of Grantham's past commentary for those interested: betting against bull market irrationality.