The U.S. stock price is so high that the AI bubble will burst and the U.S. economy will decline slightly.

As a co-founder and long-term strategist of the Fund’s management company GMO, Grantham advised investors to avoid US equities. He said: “They are almost as high as the rest of the world. He added that the stock market would be going through a difficult year, with a historically high profit rate for US firms compared to foreign competitors, which created a “double risk” for equities, with both returns and market surpluses likely to fall. Grantham was well known for predicting a recession in 2000 and 2008.

Grantham explains that the US shares would have fallen by another 20% or 30%, but the trend of artificial intelligence at the beginning of 2023 “screwly interrupted the sale and changed the trajectory of the entire stock market.” He says, “Athletic intelligence is not a scam, but Bitcoin is basically a scam.” He predicts that the “unbelievably excited” surrounding artificial intelligence will not continue, but artificial intelligence may be revolutionary as the Internet in the coming decades.

Moreover, despite the United States GDP growth of 3.3 per cent in the fourth quarter of 2023, the unemployment and inflation rates of less than 4 per cent in December, and the fact that the Fed is likely to reduce interest rates several times this year, Grantham has made pessimistic projections of the US economy, with a persistent downward trend in the yield curve and a continuing decline in the leading economic indicators for the future. He said, “The economy will become weaker. We will experience at least a slight recession.” Grantham also pointed to the threat posed by the conflict in the Russian-U and Middle East regions.

He warned that conflict could fuel a “horrifying geopolitical context, like hell, in which bad things could happen.” He added that this was particularly worrying when asset prices were at record high levels.