① Grantham, a legendary investor, said that AI was a foam, similar to the technological craze of the past; ② He predicts that the US stock market will experience a significant decline, but the development of artificial intelligence will bring long-term transformative effects.
Jeremy Grantham, a legendary investor who successfully predicted three foam in the market, once again warned that the market's endless hype about artificial intelligence (AI) was a classic foam, following the trajectory of other foam in history.
He predicted that with the growing foam, the US stock market will face a difficult road. In the latest interview, he said that once the foam of AI stock bursts, the losses will be greater and greater, because AI is no different from other technology manias that destroy the US stock market.
The greater the new idea, the greater the new invention, the overvalued the market, and the more it can attract excitement. This is not accidental, "he added.
Grantham compared the AI boom to the era of the Internet foam and the 1920s, when railways and electrification changed everything. He said that in the past, these technological manias led to a "huge foam" in the US stock market, and AI was no exception.
"The really great thing happened in the Internet stage, from 1998 to 1999. But they went too far," he said
However, he did not predict how much the stock market may fall or when a collapse may occur.
Grantham is an expert who studies foam in financial markets. Currently, he is Grantham, Mayo, Van Otterloo& Co founder and Chief Investment Strategist of GMO Co. He has much research on the classic foam period such as the 1929 crash.
In fact, at the age of over 80, he has experienced countless cycles of prosperity and collapse, many of which were predicted by him, including the bursting of the Internet foam in 2000, the top of the bull market in 2008, and the bottom of the bear market in 2009.
This is not the first time Grantham has issued such a warning. Earlier this year, he said that the US stock price was absurdly high and might be in trouble. The current hot AI is a foam destined to burst, and the economy will suffer a slight recession, or even worse.
In fact, not only Grantham, but other market commentators have also issued warnings to investors about artificial intelligence. They pointed out that the valuation of the technology industry is very high, and it is almost unclear when the huge expenditures of enterprises may generate returns.
David Rosenberg, one of the most pessimistic economists on Wall Street, said that the market was in the midst of a "super foam" and was about to usher in a "spectacular" callback, which was proved by the historical high P/E ratio and high household shareholding ratio.
Another super bearish forecaster, renowned US fund manager John Hussman, stated that based on his company's most reliable internal valuation indicators, the US stock market appears to be at its most overvalued level since 1929.