Jeremy Grantham – Bubbles, Value Investing, and the Long Game at GMO (EP. 493)

Why It Matters

Grantham’s cautionary perspective warns investors that the AI hype may repeat past bubble dynamics, reinforcing the need for disciplined, long‑term value strategies to avoid costly corrections.

Key Takeaways

• Frugality from wartime Yorkshire shaped Grantham’s investment discipline.
• Value investing beats trends, as shown by GMO’s early performance.
• Historical bubbles—railroads, internet, now AI—overinflate market expectations significantly.
• Grantham warns Nvidia resembles Amazon’s boom‑bust cycle, potentially.
• Long‑term perspective essential; short‑term hype leads to painful corrections.

Summary

The Capital Allocators episode features Jeremy Grantham, co‑founder of GMO, discussing his lifelong view of market bubbles, value investing and the current AI‑driven frenzy.

Grantham traces his upbringing in wartime Yorkshire, where scarcity bred frugality, to early stock‑picking experiments that taught him the danger of over‑expansion, exemplified by Acro Engineering’s collapse. He credits GMO’s early nine‑year winning streak to a strict value framework that shunned popular growth narratives.

He likens today’s Nvidia rally to the internet boom, noting that Amazon once fell 92% before dominating, and warns that “Nvidia looks like Amazon squared.” The analogy underscores his belief that spectacular price spikes are often precursors to steep corrections.

For investors, Grantham’s message is clear: maintain a long‑term, value‑oriented lens, resist the lure of hype, and recognize that bubbles inevitably burst. His track record suggests disciplined contrarianism can protect capital and generate outsized returns over decades.

Original Description

Jeremy Grantham is the Co-Founder of GMO, a $100 billion Boston-based asset management firm co-founded in 1977. Over six decades in markets, Jeremy has been one of the most respected and outspoken voices on value, market bubbles, and long-term investing. He recently published The Making of a Permabear with Edward Chancellor, an account of his career and investment lessons learned along the way.

Our conversation begins with Jeremy’s early lessons in frugality growing up in wartime Yorkshire and his interest in numbers and investing. We trace his career through the founding of Batterymarch and GMO, the golden period of value, painful lessons of the dot-com bubble, and the challenges since. We cover Jeremy’s framework for identifying and navigating market bubbles, career risk, and the current AI investment boom, and close with his essential philanthropic work to change the trajectory of the environment alongside the investment strategy he deploys in his Foundation.

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Original Publish Date: 03/23/2026