Jeremy Grantham: The Most Expensive Market in American History 6/26/26

Summary

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Squawk Pod – CNBC

Episode Title: Jeremy Grantham: The Most Expensive Market in American History
Date: June 26, 2026
Host(s): Joe Kernan, Andrew Ross Sorkin, Kat (guest host)
Guest: Jeremy Grantham (Co-Founder & Long-Term Investment Strategist, GMO)

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Episode Overview

This Squawk Pod episode features an in-depth and at times fiery interview with legendary investor Jeremy Grantham. With decades of experience identifying financial bubbles, Grantham presents his bearish thesis: American markets are in their most overvalued state in history and could be headed toward a devastating correction. The hosts challenge Grantham's long track record of bearishness, discuss tech valuations, the AI and IPO boom, cryptocurrency, and the changing global investment landscape. The discussion also weaves in timely news on Apple, OpenAI, SoftBank, and global economic risks.

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Key Discussion Points & Insights

1. Jeremy Grantham's Bubble Thesis

• Bubble Definition & Track Record
  • Grantham defines a market bubble using a statistical "two sigma" threshold (17:02).
  • By his criteria, bubbles occur about every 36 years and every time have fully corrected to prior trend:

    "There were 26 of them, and 26 broke all the way back to the pre-existing trend."
    (17:24 – Jeremy Grantham)

• Current Market Status
  • In terms of market value to GDP, the U.S. market is "the most expensive in American history" (19:05).
  • Prediction: When the correction comes, it's likely closer to a 70% decline than 50%:

    "Getting back to trend from here is closer to a 70% decline than a 50%."
    (19:16 – Jeremy Grantham)

• On Timing
  • Grantham admits timing is extraordinarily difficult:

    "My guess is sometime between two weeks ago, two weeks from now, two months, two quarters, and conceivably two years."
    (19:16)

2. Debate on Bearishness and Missed Rallies

• The hosts repeatedly challenge Grantham on his "perma-bear" reputation and the opportunity cost of his long bearish calls during strong bull markets.
• Grantham defends his record, noting he was publicly bullish only at the depths of the 2009 crash (“Reinvesting when terrified” letter) (20:35).
• He acknowledges missing out on much of the bull run from 2010 onward but suggests market valuation has been excessive for over a decade:

  "From 2010 until today, the P has averaged over 60% higher than it did for the prior hundred years."
  (20:59)

3. The "This Time is Different?" Question

• Sorkin asks if the AI revolution and new tech valuations justify higher P/E ratios or if we are heading for a familiar collapse.
• Grantham draws historical parallels to railroads and the Internet:

  "Great new inventions ... always accompanied by overinvestment and temporary collapse… AI is so obviously a dazzlingly important idea…So everyone...loses their shirt."
  (21:50)

• He expects the AI/tech cycle to bring short-term destruction followed by long-term benefits (Amazon, after a 92% crash, “inherited the earth”) (22:56).

4. On SpaceX, Tesla, and the Charisma Premium

• Grantham characterizes the SpaceX IPO as emblematic of market peak exuberance and “magnificent crazy stuff” (24:37).
• On Tesla, he admires the car and Musk’s “charisma and bullshit” that fueled successive capital raises and stratospheric valuation against traditional metrics (26:12):

  "Almost uniquely, Musk has the ability, I call it charisma and bullshit ... The stock continued to rise five times value once again. Sold a lot more stock, built another gigafactory ... Without that, without the stock, huge overpricing, he could not..."
  (27:41 – Jeremy Grantham)

5. Investment Strategy Outlook

• Grantham’s advice: Avoid U.S. stocks; prefer international and emerging markets (repeat view over years) (28:51).

  "I tell them avoid US stocks. The rest of the world look perfectly fine." (28:51)

• He acknowledges that his emerging markets overweight has underperformed U.S. equities for an extended period (30:42).
• Stresses bear market cycles rotate, with leadership shifting between regions over time.

6. Crypto: A Speculative Chain Letter

• Grantham sees little long-term value in crypto:

  "I think it's a useless speculative that ... over decades, it will dwindle away. I suspect not with a bang, but a whimper."
  (34:09)

• Sees Bitcoin lacking fundamental utility or stability, unlike gold.
• Kat pushes back, drawing social and historical parallels, but Grantham remains skeptical:

  "Proof of unnecessary work shouldn’t be worth a bucket of warm spit. And it will not be."
  (36:44)

7. Host Pushback and Meta-Discussion

• Kat is sharply critical of Grantham’s track record, directly challenging the utility of his bearishness for most investors since 2010 (29:45, 31:27, 37:28).
• Grantham acknowledges the criticism but stands by his approach:

  "At the top of a bull market, people loathe to hear bearish comments. They loathe it, just like you know."
  (29:22)

• He differentiates between his roles: no longer manages money at GMO, runs a family foundation focusing on green technology, which has performed cyclically (39:36).

8. Other Key Topics and News Items

• Apple’s Price Hikes & Chip Shortage:
  • Discussion about Apple’s Mac and iPad price increases, chip crunch, and lobbying efforts for Chinese memory suppliers (3:00, 42:15).
• OpenAI Delaying IPO:
  • OpenAI’s desire for a $1 trillion valuation and delayed IPO weighs on backers like SoftBank, signaling possible cracks in the late-stage AI investing boom (7:06).
• World Cup, Turkey vs. Türkiye:
  • Light segment on name changes and U.S. soccer, serving as a conversational break (11:58).
• Warren Buffett’s Caution:
  • Mention of Buffett’s high cash levels as a defensive move and another sign of bubble concerns (33:10).

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Notable Quotes & Memorable Moments

• On Market Peak & Bubbles

  "Based on the value of the stock market compared to the GDP with modifications, this is the most expensive market in American history."
  (19:05 – Jeremy Grantham)

  "Getting back to trend from here is closer to a 70% decline than a 50%."
  (19:16 – Jeremy Grantham)

• On Tech Bubbles & AI

  "AI is so obviously a dazzlingly important idea… So everyone in the end, in those situations loses their shirt… and then inherited the earth."
  (21:50 – Jeremy Grantham)

  "We're either going to be sitting on the beach, getting served mint juleps by machines, or they're going to kill us accidentally or on purpose."
  (14:01; 23:55 – Jeremy Grantham)

• On Musk, Tesla, and SpaceX

  "Almost uniquely, Musk has the ability, I call it charisma and bullshit... he talked the stock up to five times more than anyone would think it was worth."
  (27:41 – Jeremy Grantham)

• On Criticism and Bearishness

  "At the top of a bull market, people loathe to hear bearish comments. They loathe it ..."
  (29:22 – Jeremy Grantham)

• On Crypto

  "Proof of unnecessary work shouldn’t be worth a bucket of warm spit. And it will not be."
  (36:44 – Jeremy Grantham)

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Important Timestamps

• Market Opening & Apple News – 02:12–04:18
• OpenAI, SpaceX, IPO & Tech Market Risks – 06:01–09:51
• Jeremy Grantham Interview Begins – 16:10
• Defining and Diagnosing the Bubble – 17:02–19:16
• Predictions of a 70% Decline – 19:16–19:47
• Debate on Missing the Bull Market – 20:35–21:20
• AI & Tech Bubble Analysis – 21:20–23:55
• SpaceX & Tesla Analysis – 24:25–27:41
• Investment Advice – Avoid US, Go Global – 28:36–30:42
• Debate Over Track Record – 29:07–37:28
• Crypto Discussion – 34:06–36:44
• Foundation Performance & Green Investing – 39:07–40:24
• Apple’s Chip Supply/China News – 42:06–44:14

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Summary Assessment

This episode is a must-listen for market skeptics, investors wary of current valuations, or anyone interested in hearing fierce debate between a legendary contrarian and reality-checking hosts. Grantham’s doomsday market warnings are met with skepticism and detailed examination of his past bearish calls. The lively, at times adversarial tone highlights the core dilemma for investors: how much do you heed historic patterns versus today’s unprecedented technological and monetary environment? Tech, crypto, and global markets are all scrutinized with characteristic Squawk Pod wit.

Tone:
Fiery, witty, skeptical, and intellectually honest – sometimes combative, always incisive.

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Transcript

[Joe Kernan]

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[Podcast Announcer]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update Wherever you get your podcasts, bring in show music please.

[Joe Kernan]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Investor Jeremy Grantham is a veteran in the field. He founded one of the first index funds in the early 1970s.

[Jeremy Grantham]

Based on the value of the stock market compared to the GDP with modifications, this is the most expensive market in American history.

[Joe Kernan]

And he's a noted contrarian, a perma bear who says bad days are ahead.

[Andrew Ross Sorkin]

A 70% decline you think is in order?

[Jeremy Grantham]

Yes, I do. And bear in mind we set a 75% decline for the NASDAQ in 2000 in our quarterly letters and it went down 82.

[Joe Kernan]

Grantham's warning in a special interview avoid US stocks.

[Jeremy Grantham]

The rest of the world look perfectly fine.

[Joe Kernan]

Plus the rest of today's news OpenAI delaying an IPO, your iPhone getting more expensive.

[Andrew Ross Sorkin]

The Apple story may be the story of the year.

[Joe Kernan]

And waiting on an Iran deal as well is a World cup win for the U.S. men.

[Kat]

They'll have that winning, winning.

[Joe Kernan]

It's Friday, June 26th. Squawk Pod begins right now.

[Andrew Ross Sorkin]

Stand Andre Pie in three, two, one, up and Andrew two. Good morning. Welcome to Spark Box right here on CNBC. We're live at the Nasdaq marketsite in Times Square. I'm Andrew Ross Sorkin along with Joe Kern and Becky's off today on this Friday morning. A little bit of rain outside, a little bit of rain in the markets though. Take a look at what's happening in the energy markets right now. Let's show you what's going on there. WTI crude $69. You can buy Brent 70 to 29 and then take a look at treasury yields. We're looking at the 10 year note in the 2 year look at the 10 year there, 4.38. You're looking at the 2 year just straight at 2.

[Kat]

I think the Nasdaq was up when it up over 600 when we were looking at it yesterday. Closed down 100, down another 300 today. Still worries we're going to talk to someone soon but there's still worries about chips trade all all that stuff. Shares of Apple coming off a 6% drop, their worst day in more than a year. The decline after Apple raised prices on MacBooks and iPads. With the company looking to pass on the surging prices in memory and storage, passing it on to consumers. In a statement, Apple said the rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage. We have never seen a component price increase this quickly, this much this quickly. The company didn't raise prices on iPhones, but it left the door open. Future hikes and Senator Bernie Sanders weighing in with a post on X probably on his iPhone, calling yesterday's move unacceptable. He said corporate greed is Tim Cook, the billionaire Apple CEO, claiming that hiking prices on Apple products by over $200 is unavoidable. Unavoidable after it made $112 billion in profits last year and spent 310 billion on stock buybacks. Hours after Apple's announcement, Microsoft said it would increase what it charges for Xbox consoles because of soaring component costs.

[Andrew Ross Sorkin]

But this goes back to sort of the long term political gouging argument across the board. I thought, you know, I thought President Trump's comments the other day were wrong. I thought Elizabeth Warren's comments over the years about gouging them wrong. I think Sanders comments have been wrong. This is about as bipartisan an issue as you get.

[Kat]

Yes, I as you could get. I have nothing to add as we both occupy the middle and honestly report how we feel. At least I do. You are pretty honest at this point. Although there are certain things I don't think you I'm willing to admit because you get to a certain age and it's like, you know, so sue me. You're still at a point where you could do something to damage the long term prospects of, you know, of the Sorkin empire. So I might be a little bit more, more blunt. But that's come on Bernie. I've seen some good things on like Babylon B and it's like Elon Musk made a lot of people rich, right? He did. He did A lot of billionaire seen it. The only person Bernie Sanders has made rich and there was a picture of him here, up here. Different photo, different him over here. The only person he's ever made rich is himself. Okay. Done nothing for in my view is almost just kind of, I don't know what he is. He's almost a caricature at this point. I'm glad we have him to point out. You know, if you want to point to someone who has no idea about any of these things, See, this is where you won't say. This is where you won't say, well,

[Andrew Ross Sorkin]

no, because, you know, I don't want to. I don't want to. I don't want to.

[Kat]

You want him on the show?

[Andrew Ross Sorkin]

No, I don't have. I don't want to have to. The president on the other side of the side about.

[Kat]

It's not.

[Andrew Ross Sorkin]

That's gotten,

[Kat]

that's like comparing Trump's mental state to what we watched with Joe Biden, which is done every day on every website because they get a picture of him looking down. And he's supposed to watch us here. This, this will be Joe Kernan falls asleep on set. That's what they do to Trump.

[Andrew Ross Sorkin]

Now, let's talk about the trade right now. Because fears over the rising costs of AI infrastructure also hitting stocks in Asia. South Korea's Cosby falling close to 6%. Japan's Nikkei now down more than 4%. Take a look at this. SoftBank leading those losses in the region down more than 12%. In Korea, SK Hynix falling 8% while fellow memory chip supplier Samsung lost about 5%. And then just yesterday, SK Hynix has just surged following plans to raise close to $30 billion in what would be a US market listing. And what has turned out to be a standout. Those standout results from rival Micron. Now today's declines also extending into China. Take a look there. What's going on? You got Alibaba off close to 6% as well. Baidu close to 4 and a half percent and down the line.

[Kat]

And one factor that could be contributing to SoftBank's decline is a report from the New York Times that says Open Air is thinking about delaying its IPO until next year. SoftBank's a major investor in OpenAI, the Times reports that says that CEO Sam Altman has pushed advisors hired by the company to achieve a $1 trillion valuation with anything less than that, unacceptable. But watch what's happened recently in the trade. And tremors have hit the tech market lately alongside fears that AI companies may not return the high profits that some investors had been expecting. At least not near term. Times report says SpaceX's fall in value since its listing two weeks ago has worried OpenAI executives and advisors reportedly told Altman OpenAI could wait until next year for a public listing then maybe at $1 trillion valuation or hold an IPO sooner. That values a company under $1 trillion all the way back to 150. On Space X, you watch the, the rounds of capital that are raised by private companies and you think they just go up forever. Right. Is it ever with a hot item like an open air every single round it's got.

[Andrew Ross Sorkin]

But there's also no genuine market.

[Kat]

That's what I mean. But if your people are telling you, look, we could price this at a trillion and it could be a crappy debut, no one wants that either. When Google drop initially when it came out, I think yeah, we've had a

[Andrew Ross Sorkin]

whole bunch of these guys. Facebook, Facebook was the biggest. They had the drop. You know, the questions always when you're pricing an ipo, what do you get?

[Kat]

Everything you can.

[Andrew Ross Sorkin]

Are you trying to raise a ton of money? Is that what this is about for some of these companies? Is it about the long term value of what you can do with the stock? I mean that's, that's the whole game.

[Kat]

It seems eventually to get to where it should be. But initially I've, I'm the opposite view. I make it scarce that way, you know, you sell 5%. The other 95% is totally overvalued because

[Andrew Ross Sorkin]

it's the well and then question is what can you do with the overvalued stock?

[Kat]

To their credit you can't get out any.

[Andrew Ross Sorkin]

Well, you could argue by the way that Space X took their, took their stock in the. Literally what, 72 hours after the deal and bought Cursor.

[Kat]

Yeah, right. That's a good idea.

[Andrew Ross Sorkin]

I mean think about that.

[Kat]

Yeah, I think you know SpaceX at 150, is it 135. Wasn't that the, the IPO price, whatever. I think so. This, I think that was a pretty solid debut in the way it was handled. We'll see.

[Andrew Ross Sorkin]

We're going to talk to Jeremy Grantham later. He's got a lot of views about all this.

[Kat]

He wrote a book called how to Become a Perma Bear, didn't he? Or something like that.

[Andrew Ross Sorkin]

He's got a lot. So he cops it. He's got a lot of thoughts. UN agency pausing efforts to evacuate ships stranded near the Strait of Hormuz. An unknown projectile struck a container ship near the coast of Oman yesterday. Now a US Official telling Ms. Now that Iran was behind that attack. Unclear, though, if it constitutes a violation of US Moratorium of understanding. That paused, of course, the fighting in the region for 60 days. Traffic in the Strait of Hormuz has been picking up, but Iran warning earlier this week that new routes established without approval would be dangerous. Now separately, the Wall Street Journal saying that Iran sees itself potentially bringing in billions of dollars a year by charging for safety and security in the Strait. The reports say Iran has pitched the idea to other Middle Eastern countries as well as China. And you can imagine the kind of revenue that that country could pull in. And then of course, what you could do with that money.

[Kat]

Yeah, but not there straight. Just because you're able to do that. We could do that. Places. That's not going to fly. I don't think the US Finishing the group stage of the World cup with a loss to Turkey. And I'm going to drive you crazy here, Andrew, because I'm going to tell you a bunch of things that, that you don't really care whether you know or not. But you saw yesterday, the entire time it was versus Turkey A, T, U, r, K, I, Y, E. And people were asking why there's an umlaut over the U. People didn't even necessarily know it was Turkey. They were okay. In 2022, Erdogan changed the international spelling of Turkey to T U, R, K I to better reflect how Turks actually say the country's name and part of a broader effort to assert Turkish sovereignty. It's harder to adopt. You got. You need an umlaut, which we don't use above the U. So most people still just call it Turkey, but if you're worried, Turkey, but

[Andrew Ross Sorkin]

they compare it to a Turkey like Turkey.

[Jeremy Grantham]

But Turkey is.

[Kat]

Yeah, Turkey is an English word for, you know, if you call someone a Turkey, it's not great. So they probably don't really like that. So that. So that's the practical reality. Most people. No. But the other thing is we lost and it didn't matter because. And it was the final kick of the match eight minutes into stoppage time and the results don't matter. They're already headed to knockout stage. But my question to you is.

[Andrew Ross Sorkin]

Yes.

[Kat]

If you put in substitutes and you don't really, you don't really try to win as hard as you could, does that sort of instill sort of the. That it's okay to lose? Does that take the edge?

[Andrew Ross Sorkin]

Are you trying to suggest that they were throwing the game?

[Kat]

No, I'm just trying to suggest that I think you should try to win every game. And there's a, there's a.

[Andrew Ross Sorkin]

This is what's happening in the NBA right now.

[Kat]

But there's an argument that someone could get hurt. You see it at the end of the NFL season. I understand that, but you don't want to get used to losing. Like, like, it's okay. They played Bosnia Herzegovina on, on Wednesday and hopefully they'll have that winning.

[Jeremy Grantham]

Winning.

[Kat]

You know who said that? Love that guy.

[Andrew Ross Sorkin]

Charlie.

[Kat]

Charlie.

[Andrew Ross Sorkin]

Yeah.

[Kat]

If we asked him to come on. We've asked him, but it just hasn't happened. Would that not be something.

[Andrew Ross Sorkin]

That would be a fun, fun show.

[Kat]

So you would do that?

[Andrew Ross Sorkin]

Absolutely.

[Kat]

Okay.

[Andrew Ross Sorkin]

We're gonna have. But I mean, the stories are not work safe that he's got to tell us about.

[Kat]

It's cable. They're work safe in my world.

[Andrew Ross Sorkin]

I mean, you know, we'll have to tell the children to go to school. It's summer. They're camp.

[Kat]

You could tone it down. David

[Andrew Ross Sorkin]

Tease will be next.

[Kat]

Winning.

[Joe Kernan]

Coming up on Squawkpot, a conversation with legendary investor Jeremy Grantham. He warns a downturn is coming through the 2010s.

[Kat]

Were you ever bullish through that entire period?

[Jeremy Grantham]

2009. Almost there. I posted my only one pager called Reinvesting When Terrified.

[Joe Kernan]

Plus what Grantham thinks of Bitcoin and AI. You don't want to miss this.

[Jeremy Grantham]

We're either going to be sitting on the beach, getting served mint juleps by machines, or they're going to kill us accidentally or on purpose.

[Podcast Announcer]

It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See [e-mail] credit card. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Andrew Ross Sorkin]

Hey there.

[Kat]

I'm Kat.

[Jeremy Grantham]

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[Kat]

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[Jeremy Grantham]

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[Jeremy Grantham]

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[Jeremy Grantham]

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[Jeremy Grantham]

Ask a rheumatologist about Cosentyx.

[Joe Kernan]

Welcome back to Squawk Pod from CNBC Today with Joe Kernan and Andrew Ross.

[Andrew Ross Sorkin]

SoR stand Andrew by up and Andrew Hugh, our next market guest is a legend. He's got a long history of calling bubbles. Jimmy Grantham is here. He's the co founder and long term investment strategist of GMO, an asset management firm with $85 billion in assets under management. And he is the author of Making of a Perma Bear the Perils of Long Term Investing in a Short Term World. And we're thrilled to have you at the table this morning. Good morning. So we're cooking with gas apparently, or with Greece. And the question is, are we in a bubble? Are we not in a bubble? Are we always in a bubble? And how much of this is about being able to call the timing versus being able to actually understand the underlying economics at play?

[Jeremy Grantham]

Okay, we needed a definition of a bubble, so we found a very precise one. A nerdy statistical term to sigma, the kind that would come up every 44 years if it was completely random. And actually it comes up every 36 years. So it's pretty close. And we tracked through and found all the bubbles that met that definition and we asked the question how many broke all the way back to the pre existing trend? And there were 26 of them and 26 broke all the way back to the pre existing trend and some of them went up from two sigma to two and a half sigma and in the case of Japan, almost three sigma. So they can be painfully higher than just two sigma. And that's the problem because the client's patience is not quite as long So

[Andrew Ross Sorkin]

I appreciate the problem of calling it. Of calling it. But the other problem is that it has paid shockingly well to be a perma bull over the last hundred years more than it is paid to be a perma bear.

[Jeremy Grantham]

Oh, of course, we live in a rising economy in the long run, but half the time you're waiting to get back to the old high. People don't realize that because we've just spent the last, whatever it is, 16 years going up. But in the long run, it's half the time. After 1929, you have to wait until 1954. After 1972, you have to wait until 80. 80. A long time.

[Andrew Ross Sorkin]

1 or 81 or 82.

[Jeremy Grantham]

Yeah.

[Andrew Ross Sorkin]

And so. So where are we now then? What's the.

[Jeremy Grantham]

What's the comparable to you in a very real sense? I'm not sure there is a comparable, but the tech bubble of 2000 would come the closest on the ways that are the value systems that are most predictive based on the value of the stock market compared to the gdp. With, with modifications. This is the most expensive market in American history.

[Andrew Ross Sorkin]

And if it's the most expensive market in American history, does that mean that it's overvalued and has to go down from here? Or is it possible that it could continue to go up for many more years?

[Jeremy Grantham]

My guess is sometime between two weeks ago, two weeks from now, two months, two quarters, and conceivably two years. The timing is always terribly uncertain. The market's going to peak out and drop back to trend. And getting back to trend from here is closer to a 70% decline than a 50%.

[Andrew Ross Sorkin]

A 70% decline you think is in order?

[Jeremy Grantham]

Yes, I do. And bear in mind, we set a 70, 75% decline for the NASDAQ in 2000 in our quarterly letters, and it went down 82.

[Kat]

What was in 2021 and 2022? What was your super bubble call? And that predicted an imminent catastrophe crash across stocks, bonds, real estate, commodities and stocks? Another one in 2023. Another collapse prediction. No, no, no.

[Jeremy Grantham]

But how about. How about 2021 was a super. The only two times I clearly said it's now. The other times I said it's overpriced. The 21st century has been overpriced by the standards of the 20th century. 100 years of data, we've been overpriced.

[Andrew Ross Sorkin]

Is there any argument around. I was going to make an argument

[Kat]

of technology or 2010 through the 2010s. Were you ever bullish through that entire period?

[Jeremy Grantham]

2009? Almost there. I posted my only one pager called Reinvesting when terrified. But most of the time there was

[Kat]

a big, big bull market.

[Jeremy Grantham]

Bottom 2010-201020-20666. Okay, but nobody else, by the way, was touting the market that week, that month.

[Kat]

But through 2010, a huge bull market to 10 to 220.

[Jeremy Grantham]

From 2010 until today, the P has averaged over 60% higher than it did for the prior hundred years. Now, I don't know when you decide to say the market is overvalued, but if you're if traveling at 60% higher pay than it used to be, I think that it doesn't say the market's going to collapse, but it does indicate it's expensive.

[Andrew Ross Sorkin]

Well, that was. But my question, this goes to the technology piece of it and I think we're in this moment now with AI where everybody's, you know, asking the question which is, you know, the most dangerous words in economics is this time different? But you talk about a 60 times P. Are we in a situation 60%, 60% harpy. Are we in a, in a moment now though, where the technology fundamentally is different and it fundamentally is going to rewrite the rules of investing and valuations and everything else.

[Jeremy Grantham]

The great new inventions, railroads are always accompanied by. It's going to rewrite the rules. Internet, a huge invention, changed everybody's life. They were always accompanied by overinvestment and temporary collapse out of which the railroads changed the world. The Internet changes the world. This is exactly the case today. AI is so obviously a dazzlingly important idea. Everybody knows it, don't they? Yeah, we all know it. And therefore we all want to put our money in it, don't we? So we all put our money in it and it sucks in more than you can shake a stick at and you get overinvestment. So everyone in the end, in those situations loses their shirt. They lost their shirts in the railroad. Brilliant idea. They lost their shirts in the Internet. These are the three great ideas of the last 200 years. And they will lose their shirts. And I now, out of that, bear in mind that Amazon in 2000 came down 92%. It had gone up six times. It came down 92% and then inherited the earth.

[Andrew Ross Sorkin]

Well, so, you know, I'd asked Jeff Bezos about whether we were in a, in a bubble when I saw him and interviewed him on this broadcast just a couple of weeks, maybe a month ago now. And he said we might be in a bubble, but actually that bubbles unto themselves when you think about sort of Great innovation and great progress, even for humanity is required.

[Jeremy Grantham]

Think of the fiber optic cable that got laid. It ruined everyone at the time, back in 2000. But we used, eventually we used all that cable. The trouble is, by the way, that fiber optic cable would last a long time. Chips today may be redundant in two years.

[Andrew Ross Sorkin]

You think there's actually a big distinction.

[Jeremy Grantham]

I do.

[Andrew Ross Sorkin]

Between some of the investments that were made then and, you know, we were talking when I was talking to Jeff, who was about biotechnology and actually a lot of stuff that actually, you know, there's that bio. Biotech bubble and. But a lot of great things came out of it. You think less great things are ultimately going to come out of this sort of data center.

[Jeremy Grantham]

I think this is going to change everyone's life. The disagreement in opinion is more profound than I've seen in any other anything in the stock market ever, really. The Nobel Prize winners disagree, the bosses disagree, the worker bees disagree. Everyone disagrees about the consequences. We're either going to be sitting on the beach getting served mint juleps by machines, or they're going to kill us accidentally or on purpose somewhere in that range.

[Andrew Ross Sorkin]

We haven't talked about Elon Musk yet and we haven't talked about Space X, which obviously just had its IPO two weeks ago.

[Jeremy Grantham]

Now, the Mag 8, by the way,

[Andrew Ross Sorkin]

and the Mag 8. How do you think about a Space X in this moment?

[Jeremy Grantham]

I think it's wonderful. I think historians in 50 years, 100 years are going to look back at space, Space X and its timing and its $2 trillion based on magnificent losses on its extrapolation of what its addressable market is.90%.90% is based on a third rate or a second rate at the moment version of AI compared to some of the two or three other champs kicking its bottom around the block. Note, they're going to look back and they're going to say this was one of the defining peaks of all time. It's what you want at the market peak. You want a truly magnificent crazy stuff.

[Andrew Ross Sorkin]

And you think, and you think that's therefore it will not work. Or you're saying that therefore this marks the top and you will.

[Jeremy Grantham]

It's the kind of thing you see around the top.

[Kat]

It's.

[Andrew Ross Sorkin]

But is it possible that SpaceX is the next. I mean, it's already surpassing, frankly, almost Amazon here. But do you say to yourself, 10 years from now this will turn out to be a great investment?

[Jeremy Grantham]

That's very difficult. It's like, Amazon, Amazon. I'm sitting there in 2000, you're asking me the question and I'm saying I'm absolutely confident it will have a crash, but where it will go in the long term. The long term is complicated. I don't know. But is it going to have a crash like Amazon? Yes, very likely. And then what happens is indeed it may fail, float away debris on the waves of time, or it will inherit a lot of the market like Amazon did.

[Andrew Ross Sorkin]

What do you think of Tesla?

[Jeremy Grantham]

I drive a Tesla. I think it's great and I think, you know, it has a future. Fighting it out with the Chinese for.

[Andrew Ross Sorkin]

But would have you ever imagined if we had had this conversation 10 years ago? I think you would have. You would have said tesla's crazy.

[Jeremy Grantham]

I did say Tesla was crazy 10 years ago.

[Kat]

Right.

[Jeremy Grantham]

And let me point out, I bought a Tesla, I wrote a quarterly letter comparing it to the stock and said, stock's overpriced. The car is beautiful. You know, in six years I haven't been into the garage. People underestimate, for old fogies in particular, what a wonderful bonus that is. Not going into the garage. But I said the stock is overpriced. And if you looked at the return on equity and you looked at the return on equity through the next 10 years, there is no way it could do anywhere near as well as it's done. So how did it do it? Almost uniquely, Musk has the ability, I call it charisma and bullshit. The mix of charisma and bullshit, he talked the stock up to five times more than anyone would think it was worth. And then, and this is the key difference, he sold a lot of stock, he grabbed a lot of money. He built a gigafactory. He turned it into real life for anyone else selling a lot of stock, the stock collapses. And everyone said, oh, dilution, dilution, they're killing me. But he talked them out of that. The stock continued to rise five times value once again. Sold a lot more stock, built another gigafactory without that, without the stock.

[Andrew Ross Sorkin]

But it's right.

[Jeremy Grantham]

Huge overpricing. He could not.

[Andrew Ross Sorkin]

One of the, one of the great things, things that he had managed to do that people didn't take into account was just his ability to raise capital.

[Jeremy Grantham]

Yet the ability to talk the stock up first and then the willingness to raise capital. The problem is the scale of Space X compared to Tesla then is absolute day and night. You know, you have a small market cap that you can talk up. You have a gigantic market cap cap. And the other difference was we were nowhere near in a flowering crazy market Back then as we are today. So the timing is rotten, the scale is massive. These are tough times.

[Andrew Ross Sorkin]

You've got a fund here. So what is the, what is the Grantham fund do? What does the Grantham family do with its money? Given your perma bear and sort of feelings about the universe right now.

[Jeremy Grantham]

One thing to be clear, I do not manage money for GMO. Now, for 15 years I have let my colleagues get on with it in my.

[Andrew Ross Sorkin]

But I assume they ask you for advice.

[Jeremy Grantham]

Well, I give it with.

[Andrew Ross Sorkin]

Okay, and what do you. So what do you tell them?

[Jeremy Grantham]

I tell them avoid US stocks. The rest of the world is look perfectly fine.

[Andrew Ross Sorkin]

So you say avoid U.S. stocks. Have you been, how long have you been saying avoid U.S. stocks for to them?

[Jeremy Grantham]

Oh, a long time, but.

[Andrew Ross Sorkin]

And do you feel like you missed it?

[Jeremy Grantham]

Emphatically. But don't you feeling it at the beginning of last year? I mean emerging is up 65%, Joe. And the last.

[Kat]

But that would be one of the criticisms, you know, if you, if you. All you got to do is yourself. And you'll see where all the criticism and they are abundant, Jeremy.

[Jeremy Grantham]

But what let me just point out, by the way, at the top of a bull market, people loathe to hear bearish comments. They loathe it just like you know.

[Kat]

I don't loathe it. It's just that.

[Jeremy Grantham]

No, no.

[Kat]

If I, if I, if your fund had acted on any of your calls from 2010 to today, you would have severely underperformed. Just the S and P. Well, you

[Jeremy Grantham]

haven't read my quarterly letters. Bracing yourself for a market melt up was 2018. 2018, Joe.

[Kat]

I'm not. I just did a cursory look at.

[Jeremy Grantham]

Cursory.

[Kat]

Okay, how about reading the saying emerging markets were going to do better than. That's been dead wrong for as long as you've held that opinion.

[Jeremy Grantham]

And I have not said emerging markets will indefinitely beat the U.S. what I did say this public record in, in 2000 was that our 10 year forecast had emerging markets at plus 12 in first place and then 13 asset classes down. We had the S and P at minus 2.

[Kat]

Is this an, this is, this is false.

[Jeremy Grantham]

Later. All right, minus three for 10 years and the S and P. Okay, this is false.

[Kat]

Emerging markets over US equities, a long running GMO position that has chronically and severely underperformed for well over a decade. Is that false?

[Jeremy Grantham]

Yeah, I don't think we've made a huge fuss about emerging markets until January of last year. We. We came out again. But we Came out very strongly in 2000, made a 10 year call, public record and the S and p went down 3% a year compounded for 10 years. That is no fun. And emerging went up almost 13% compounded. So it was over 200 percentage. You don't have the S and P.

[Kat]

You don't accept that you through the 2000s and earlier in the 2000s that you missed the mark more than I have hit the mark.

[Jeremy Grantham]

I have no trouble saying the S and P kicked the bottom of emerging for at least 10 years. No, 10 years.

[Kat]

Not what I just said. You don't think that, I mean this gets nasty. It just says that you were right about the 2000.com bubble and 2008 housing bubble with good timing on both. That record earned you enormous credibility which you've arguably been living off of ever since. And not right since.

[Jeremy Grantham]

That's, that's Claude Fine. I have been out of the business of managing money for your clients. Yeah, no, we have competent funds run by competent long term professionals and they speak for themselves. I actually looked after money and the positioning of the accounts up until the age I was 70 seems reasonable to me. Right. And I was 70 very conveniently in more or less.

[Andrew Ross Sorkin]

Right.

[Jeremy Grantham]

Let me, let me ask you a different question. I was 70 the last year I had any influence at GMO was 2009.

[Andrew Ross Sorkin]

Let me ask you a different question. Just about the beginning of the. When you look at the, the great investors of today, who do you look at? And the reason I ask is, you know, invariably I'm thinking you might put Warren Buffett on that list. Warren Buffett has an extraordinary amount of cash on the sideline right now. And some people look at that almost as directionally a not a short bet, but a waiting for some kind of moment bet that sort of hedged against something that looks like, you know, a conglomerate or almost a mini S and

[Jeremy Grantham]

P. Warren Buffett, 9% ahead of the market for 60 years, best record in the business by far. And he's been raising they the fund have been raising cash as fast as they can for over three years. And Joe could say, well Warren, you missed it this time. You have to move in advance. My point about emerging is emerging kicked S and p bottom for 10 years, over 200 percentage points ahead. Then the S and P kicks emerging bottom for 12, 13, 14 years. That's the way it's gone through time.

[Andrew Ross Sorkin]

Do you think that the emerging and flowing today, do you think the emerging story is still the story? That's where you, if you were rotating money.

[Jeremy Grantham]

If I had to own equities, I would much prefer to own emerging and non US equities. Europe, Canada, Australia and so on.

[Andrew Ross Sorkin]

Dare I ask you what you think of crypto?

[Jeremy Grantham]

No, you. I think it's. I think it's a useless speculative that

[Andrew Ross Sorkin]

goes to zero in your, in your calculus.

[Jeremy Grantham]

No. Years and years, decades and decades, it will dwindle away. I suspect not, not with a bang, but a whimper.

[Andrew Ross Sorkin]

And you think that because.

[Jeremy Grantham]

Because it's not a stable form of value, it just halved it for no particular reason in a strong economy. So you can't depend on it in that way. And by the way, over the same time period, gold made a strong gain. Yes, it's down from the peak, but it's. It's made a strong gain over that time period. It's. People don't use it to make serious trades. They don't use it to buy their dinner and pay on the supermarket. So what the hell does it do? What it does is allows crooks to move money around without leaving a trace. Brilliant.

[Andrew Ross Sorkin]

But. So here's the thing.

[Jeremy Grantham]

You understand speculative, right?

[Andrew Ross Sorkin]

So you say that, and people like Jamie Dimon have made that point before. And yet, you know, the other side of that argument would say tell it to the person who has either made a fortune when they bought it at 5,000 and even today sitting at whatever it is, $60,000 or, or tell it to the person who should have bought it at 5,000 and is. And is looking at the 60,000. Now it's different if you get to the 120,000.

[Jeremy Grantham]

One of my colleagues at GMO actually bought it less than a dollar.

[Kat]

And blockchain is a real technology and there's a lot that will transform the way things are done.

[Jeremy Grantham]

We're talking about bitcoin, Talking about bitcoin,

[Kat]

which encrypt the whole finance.

[Jeremy Grantham]

And I mean money.

[Kat]

Money is nothing. There's nothing that sacred about. About what represents a form of exchange and the way that bitcoin is structured.

[Jeremy Grantham]

Fine.

[Kat]

It. There are people that would argue with

[Jeremy Grantham]

you that it has a heart other than the fact that some people have made a lot of money like a chain letter. What. What does crypto do?

[Kat]

I don't understand the question.

[Jeremy Grantham]

What, what, what does the use of crypto. It pays no dividend. It doesn't represent an asset you can put your fingers on. There is nothing there there. It is just an idea that it will go up in price. If you trust me, it will go up.

[Kat]

When, when in the. On an island when shells were used to represent an hour of work that you got 100 people each one comparison.

[Jeremy Grantham]

This is completely faith based.

[Kat]

It represents proof of work. Represents proof of work. You're going to be totally wrong on Bitcoin too. You're going to be wrong on everything.

[Jeremy Grantham]

You've proof of unnecessary work shouldn't be worth a bucket of warm spit. And it will not be.

[Kat]

All right. It's only been 20 years so far so someday you might might be right about this.

[Andrew Ross Sorkin]

Well look, Warren Buffett's in the same camp.

[Kat]

No, I know. Yes, so is Charlie Munger. But you want me to list 10 people that aren't in that camp that are.

[Andrew Ross Sorkin]

I'm just suggesting that there's a lot of smart people who also have that view.

[Kat]

A lot of smart people who have a different view.

[Jeremy Grantham]

The point is it hasn't outlived a general bull market. We've been in a bull market since March of 09. Right. And when we get into a bear market which Joe may may think we never will be again a serious of down 5067 do we think it will prosper A lot of that environment.

[Kat]

Anybody that listen to you from 2010 is you've done a grave disservice to them. So if you feel fine with that, that's. That's what you do for a living, that's fine. I don't have a problem. Andrew invited you on. I'm just pointing out the facts of the situation. If someday you might be right like a broken clock. That's what we'll see. This may be a huge bubble that we're in but you said it again and again and again and again and again and again.

[Jeremy Grantham]

And its view from gleaning the Internet. These are your track record. It isn't my track record. I can go through and give you quarterly letters which I have written prepare bracing yourself for. For a melt up a market. Melt up 2018 that's already 8 years proof you don't know what you're talking about. And there are plenty of others like that.

[Andrew Ross Sorkin]

I don't know where to go with that. Joe, you can take them. I hear.

[Kat]

So I said my piece. You booked and you've got your 1929 book out. Maybe it happens at some point, maybe it doesn't but you know, hopefully it doesn't. The market at this point the S and p is pushing 8,000 eventually and you've probably been bearish for 80% of that.

[Jeremy Grantham]

I've been. I've been saying that the market is overpriced. By long term standards.

[Kat]

We were 2300 at the bottom in April of, of 2021. Did you ever turn bullish? So I rest my foundation. I don't have an accent. Game is your guess. Whatever. But this is, this is the way it is.

[Jeremy Grantham]

If you didn't write it, you never said it. Right? Okay. This, this bull from the Internet is one thing. If it's in a quarterly letter, I accept responsibility.

[Andrew Ross Sorkin]

Okay?

[Jeremy Grantham]

The bad news is I wasn't writing quarterly letters in 2021. So I can't point to anything.

[Kat]

My viewers can make a decision.

[Jeremy Grantham]

I was running our family foundation. I can tell you what that was doing.

[Andrew Ross Sorkin]

Right?

[Jeremy Grantham]

And by the way, why don't we just do that?

[Andrew Ross Sorkin]

I know we got to go. How's the family foundation? Done. No, I'm just giving you the opportunity. Given, given, given. The criticism is done.

[Jeremy Grantham]

Life, it's been hugely cyclical. Up until five years ago, it was on a ten year basis, beating Harvard and Yale's endowment.

[Andrew Ross Sorkin]

Okay.

[Jeremy Grantham]

It was doing very, very well. We were zero on the database, the top. And then we were at the bottom. Docker. Because we were caught in green tech.

[Andrew Ross Sorkin]

Okay.

[Jeremy Grantham]

The reason we're caught in green tech is that's our mission. We try and invest our money to encourage new ideas in green technology. And we entered an ordinary bust, which is fine. We counted on that. What we didn't count on is entering at the end of that an administration that is so implacably anti green and VC companies are not designed to withstand seven years of tough environment. So it's very tough in the green tech world.

[Andrew Ross Sorkin]

Jeremy Grantham, thank you for engaging with us. I appreciate it. Congratulations on the book and we appreciate you being here.

[Joe Kernan]

We'll be right back.

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[Andrew Ross Sorkin]

Here's Andrew Apple may be looking for other sources for chips I want to get over to Mackenzie Segalos joins us now with more.

[Mackenzie Segalos]

So Andrew, Apple again turning to Chinese memory suppliers as it searches for relief from the chip crunch that just forced a round of Mac and iPad price hikes. People I've spoken with across the memory supply chain say the focus is on China's two big domestic memory players. That's Yancy Memory Technologies, or ymtc, which makes NAND flash storage, and Chongqing memory technologies, or CXMt, which makes DRAM, the working memory used in phones, PCs and servers. Now both are state backed challengers to Samsung, SK, Hynix and Micron. Counterpoint Research says YMTC now has 13% of the global NAND market, while CXMT, which is preparing for a Shanghai IPO, has 8% of DRAM. Apple it's been here before. In 2022 it explored using YMTC chips in China, sold phones, only to retreat under pressure from Washington, including then Senator Marco Rubio, who warned Apple was, quote, playing with fire and Apple wouldn't be alone in this. HP and Lenovo are both reportedly pursuing Chinese memory but qualifying a new supplier, especially in China. Take anywhere from several months to years, including device testing, reliability checks, factory audits and technical sharing. For ymtc, it is even more complicated because it has been on the commerce entity list since 2022, limiting what American companies can share without approval. I'm told by two people briefed on talks that major American tech companies are actively pressing commerce and other parts of the US Government for more flexibility to qualify and use Chinese memory. And I'm just off the phone with a person briefed by someone in the White House on current efforts underway. They say that Apple is actively lobbying within the administration for this. Apple at this point, not weighing in beyond that. Tim Cook interview to the Journal last

[Andrew Ross Sorkin]

week Guys, Thanks Mackenzie. It's fascinating. We're going to keep our eyes on this and so much more because Apple, the Apple story is the Apple story may be the story of the year. I think in a weird way, we're going to see what happens this fall, what you think happens with all the pricing. I mean, whether you think people are going to buy these new phones at much higher prices.

[Kat]

It's. And is it inelastic? Pretty inelastic, probably. Although you can choose when to get

[Andrew Ross Sorkin]

a new phone, choose when to get a new phone. You could choose what level of phone, you know, sort of which premium phone tier. And some of the new phones, whether it's this, you know, you want to flip, the foldable phone is going to cost, you know, an extraordinary amount of money. And so the questions are, you'll get a foldable phone. I don't know. I think I probably will. Maybe the first time out, maybe not maybe. It depends. I want to see, I want to see how thin it is. If it's this thin, sure. But I can't imagine it is.

[Joe Kernan]

And that is Squawk Pod for today and for the week. We made it to Friday. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Follow Squawkpod wherever you get your podcasts. We'll meet you right back here on Monday. Have a great weekend.

[Andrew Ross Sorkin]

We are clear. Thanks, guys.

[Podcast Announcer]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update. Wherever you get your podcasts.