Newsletter Reviews

Grantham’s investing theme: We’re running out of everything

SOURCE: [The Globe and Mail] - Jeremy Grantham’s latest note to clients is not exactly a ray of sunshine for the future of humanity, but at least it provides a big upside to investors: Fertilizer producers, energy companies and mining firms look set to benefit from a long-term trend where supply cannot meet surging demand.

“The portfolio investment implications are that investors should expect resource stocks – those with resources in the ground – to outperform over the next several decades as real prices of the resources rise,” the chairman of asset manager GMO LLC said in his note.

The backdrop to this call is downright depressing. He notes that the global population is expected to rise to more than 9 billion by 2050, and the journey toward that mark will be defined by increasing instability as people and countries compete for scarce resources.

Agricultural needs are a key area of concern, and one that is being underestimated by the general public, governments and financial markets. Mr. Grantham argues that food production might have to double by 2050 to feed everyone even at a modest level, yet productivity increases have slowed to a crawl and extreme weather patterns have had a punishing impact on food prices.

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