Toxic chemicals are an unseen investment risk, says Jeremy Grantham - Business Insider

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The market legend who predicted the past 2 bubbles says people are turning a blind eye to toxic chemicals — and warns they're underestimating the investment risk

Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.The health risks of some of the products chemical companies sell will become an investment issue for those companies themselves, Jeremy Grantham says.He predicts today's toxic chemicals will be banned in the coming years, and those consequences will play out in chemical firms' stock prices.

For the companies that make products that use such chemicals, that's about to become a major problem: As the risks of endocrine-disrupting chemicals gain more attention, Grantham predicts there will be a widespread ban on a wide range of chemicals, "which constitute a major fraction of earnings for some chemical companies."

"It is clear to me that several chemical companies represent high levels of risk in this area, risks that are currently underestimated," Grantham said. The chemical sector has trailed the S&P 500 over the last three years, returning 19.04% versus the S&P 500's 44.85%, according to Fidelity. So far this year, that trend has continued: The sector has lost 2.67% versus the S&P 500's 3.0% gain.

 

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