In a recent interview by Michael Brennan of Morningstar with GMO cofounder, Jeremy Grantham, we were encouraged to see someone take a very pragmatic and convincing view of the actual commodity and resource scarcity that lies ahead. The interview with Jeremy Grantham was indeed an eye opener with a not-so-subtle nod to Malthus.
A quote from the June 20, 2012 Morningstar article entitled “Grantham, the Bull?”:
I believe we’re running out of resources,” he says. “There was a very big phase change in 2002. After 100 years of price declines in real terms, we had a move upward. In 10 years, we gave it all back without making the cover of Business Week. That seems to be a very big event; I’ve been hammering on that for four years.
Grantham says that his portfolios are approaching a 50% weighting in natural resources, and he remains confident in that investment despite the short-term market corrections.
I think the trend is up, and that makes a big difference for those who own the assets in the ground,” he says. “This is the biggest change in the long-term business outlook I’ve seen in many, many decades.
In his latest quarterly letter, Jeremy Grantham writes extensively about commodities, shortages and some of his best investment ideas. Click here to open that letter – Its a very, very compelling read.