Jeremy Grantham called pandemic crash but screwed up his trade: memoir

"Legendary investor Jeremy Grantham raised the alarm on an AI bubble, revealed a pandemic bet that didn't pay off, and recommended young people steer clear of Wall Street in a memoir published last month. The GMO cofounder wrote in "The Making of a Permabear: The Perils of Long-term Investing in a Short-term World," which he coauthored, that ChatGPT's release in late 2022 shored up a crumbling stock market and created a "bubble within a bubble.""

"There's "no clear historical analogy to this strange new beast," Grantham wrote, but the AI bubble is likely to "at least temporarily deflate," allowing the original market bubble to pop. He issued a grim outlook, warning that the massive run-up in stocks has frontloaded returns so the market's long-term prospects "look as poor as almost any other time in history." Investors face either a "dismal return forever or a hefty bear market followed by a normal return," he added."

"Right bet, wrong size. Grantham disclosed in his book that he anticipated the COVID-19 pandemic would tank the stock market, but he didn't win big from the prescient call. The investor wrote that he dug into every rumor about the mystery virus in January 2020, and determined it posed a serious medical and economic threat, especially if countries bungled their responses."

ChatGPT's release in late 2022 shored up a crumbling stock market and created a "bubble within a bubble." There is no clear historical analogy to the AI surge, which may at least temporarily deflate and allow an original market bubble to pop. Massive stock run-ups have frontloaded returns, leaving long-term prospects poor; investors face either dismal returns forever or a hefty bear market followed by normal returns. Past interest-rate hikes and pandemic-era speculation are expected to culminate in a recession. Anticipation of COVID-19 predicted market damage but failed to produce large gains. Investing is called a trivial activity and young people are urged to build more valuable skills than finance.

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