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49 results found.
Waiting for the Last Dance
by Jeremy Grantham of GMO,
Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this [bull market] event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.
Covid-19, Climate Change, and the Need for a New Marshall Plan
by Jeremy Grantham of GMO,
In a new piece – “Covid-19, Climate Change, And The Need For A New Marshall Plan” – GMO’s Jeremy Grantham discusses the impact of Covid-19 on the economy of the developed world, arguing great strides are necessary in order for the U.S. and the world to accelerate growth.
1Q 2020 GMO Quarterly Letter
by Ben Inker, Jeremy Grantham of GMO,
In a new quarterly letter to GMO clients, Ben Inker, head of asset allocation discusses the current uncertainty over the market and economic outlook and the decision to significantly reduce net equity exposure in the GMO Benchmark-Free Asset Allocation Strategy. Alongside Inker’s letter, Jeremy Grantham writes in “The Virus, The Economy and The Market” ...
Chemical Toxicity And The Baby Bust
by Jeremy Grantham of GMO,
In today’s society people are choosing to have fewer children, and delaying having children at all into later, less fertile years. These two factors have driven fertility rates below replacement level in most of the world, but a crucial third factor gets little attention and is having a profound impact on fertility: toxicity. The economic and social ramifications will be severe.
The Race of Our Lives Revisited
by Jeremy Grantham of GMO,
In a new white paper on GMO’s website, Jeremy Grantham updates his discussion of the threats posed by climate change, population growth and increasing environmental toxicity, and his perspective on the role investors can play in combating these threats. In “The Race of Our Lives Revisited” Grantham summarizes the current state of affairs and the likely impact on the future ability to feed the 11 billion people projected to live on Earth by 2100.
Bracing Yourself for a Possible Near-Term Melt-Up
by Jeremy Grantham of GMO,
In the latest GMO Viewpoints -- "Bracing Yourself for a Possible Near-Term Melt-Up" -- Jeremy Grantham has a warning for bubble watchers: the next phase in this long-running bull market may be even more dizzying gains. Among the factors Grantham considers are the acceleration of price, increasing concentration like that in tech "winners," outperforming quality and low beta stocks and the role of the Fed in recent bubbles.
GMO Quarterly Letter
by Ben Inker and Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker discusses why investors should be thinking about the risks of surging inflation, even if such a surge may not be inevitable or even probable. Chief investment strategist Jeremy Grantham considers the current market environment and how to most rationally take risk with the ultimate stakes on the line.
The Good Thing About Climate Change: Opportunities
by Lucas White, Jeremy Grantham of GMO,
In a new white paper, “The Good Thing About Climate Change: Opportunities,” GMO’s Lucas White and Jeremy Grantham discuss the growing problem of climate change, the exciting investment possibilities in companies combating that peril and the best ways for investors to approach the opportunity.
I Do Indeed Believe the US Market Will Revert Toward Its Old Means – Just Very Slowly
by Jeremy Grantham of GMO,
Jeremy Grantham explains why he believes that the high equity prices in today’s market have some staying power, and expects it will take much longer than usual for the power of mean reversion to draw profit margins and price earnings ratios back to historical norms.
GMO Quarterly Letter
by Ben Inker, Jeremy Grantham of GMO,
The past five years have been challenging for long-term value-based asset allocation. We do not believe this constitutes a paradigm shift, dooming such strategies in the future. The basic driver for long-term value working historically has been the excessive volatility of asset prices relative to their underlying fundamental cash flows, and recent history does not show any evidence of that changing. Outperforming the markets given that pattern requires either betting that the excessive swings will reverse over time or accurately predicting what those excessive swings will be. The former strategy amounts to long-term value-based investing, while the latter requires outpredicting others as to both what surprises will hit the markets and how the markets will react to them. Our strong preference is to focus on long-term value, despite the inevitable periods of tough performance that strategy will entail.
GMO Quarterly Letter
by Ben Inker, Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines U.S. high yield corporate bonds, an "asset class that had a notably bad year," concluding, "at current spreads, high yield seems to be no worse than fair value and probably better than that... In today's environment, that makes it one of the best available risk assets for investors" ("Giving a Little Credit to High Yield").
GMO Quarterly Letter
by Ben Inker, Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines whether emerging-market equities might be a "value trap," and if U.S. equities are "deserving of trading at a premium P/E to the rest of the world" ("Just How Bad Is Emerging, and How Good Is the U.S.?"). In part two of the letter, chief investment strategist Jeremy Grantham provides "a list of propositions that are widely accepted by an educated business audience ... but totally wrong. ...
Are We the Stranded Asset?
by Jeremy Grantham of GMO,
In part two of the letter, chief investment strategist Jeremy Grantham examines the factors behind declining estimates of U.S. and overseas GDP growth, and offers an outlook for the coming years ("Are We the Stranded Asset? (and other updates)").
Why Were We So Surprised?
by Jeremy Grantham of GMO,
Chief investment strategist Jeremy Grantham examines the sources for the "unique decline" in the oil price since June, and offers an outlook for the coming years -Why Were We So Surprised? The Oil Glut, Saudi Decisions, and the Uniqueness of U.S. Fracking
Bubble Watch Update
by Jeremy Grantham of GMO,
As you may remember, the January Rule serves as a kind of barometer for the behavior of the market in the coming year. Historically, when January was down, the rest of the year had over twice the declines than one would expect randomly, far more mediocre months, and a very sub average return. But it is far from perfect and it had the unusual problem this year of bumping into the positive signal from the Presidential third year, which started for us on October 1.
The Beginning of the End of the Fossil Fuel Revolution (From Golden Goose to Cooked Goose)
by Jeremy Grantham of GMO,
The quality of modern life owes almost everything to the existence of fossil fuels, a massive store of dense energy that for 200 years had become steadily cheaper as a fraction of income. Under that stimulus, the global economy grew ever larger, more complex, more inter-related and, I believe, more fragile. Then around the year 2000 the costs of finding oil start to rise at over 10% a year, and with the global economy growing at only 4% oil starts to fall behind in affordability.
Summer Essays
by Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker uses the evolving Boston culinary landscape as a backdrop to examine the tendency of investors to pursue a "free lunch," when they should be looking for the "investing equivalent of an inexpensive and tasty food truck meal instead." In his section, chief investment strategist Jeremy Grantham looks back at investing mistakes made over his 47-year career, paying special attention to his formative investing years and the "painful lessons" learned therein.
Looking for Bubbles Part One: A Statistical Approach
by Jeremy Grantham of GMO,
It is a sensible expectation that reasonable long-term value investors will endure pain in a bubble. It is almost a rule. The pain will be psychological and will come from looking like an old fuddy-duddy? looking as if you have lost your way in the new golden era where some important things, which you have obviously missed, are different this time. For professionals this psychological pain will also come from loss of client respect, which always hurts, and loss of peer group respect, which can be irritating.
Year-End Odds and Ends
by Jeremy Grantham of GMO,
In a new quarterly letter to GMOs institutional clients, chief investment strategist Jeremy Grantham offers "Year-End Odds and Ends": Fossil Fuels: Is Tesla a Tease or a Triumph?, Fracking and Yet More Technical Stuff on Fracking, Update on Metals, Fertilizers, and Food, Problems in Forecasting Short-term Prices for Resources, Another Look at U.S. GDP Growth, Investment Lessons Learned: Mistakes Made Over 47 Years
Ignoble Prizes and Appointments
by Jeremy Grantham of GMO,
Chief investment strategist Jeremy Grantham comments on this years Nobel Prize in economics and "the most laughable of all assumption-based theories, the Efficient Market Hypothesis"; candidates to succeed Chairman Bernanke at the Fed; the impact of commodity price rises and the housing bubble in the crash of 2008; and prospects for the U.S. equity market.
The Race of Our Lives
by Jeremy Grantham of GMO,
Our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action.
Investing in a Low-Growth World
by Jeremy Grantham of GMO,
This quarter I will review any new data that has come out on the topic of likely lower GDP growth. Then I will consider any investment implications that might come with lower GDP growth: counter intuitively, we find that investment returns are likely to be more or less unchanged a little lower only if lower growth brings with it less instability, hence less risk. Finally I will take a look at the reaction to last quarter's letter, specifically about my outlook for lower GDP growth.
On the Road to Zero Growth
by Jeremy Grantham of GMO,
In a new quarterly letter to institutional clients, GMO chief investment strategist Jeremy Grantham makes the case that, "the U.S. GDP growth rate that we have become accustomed to for over a hundred years -- in excess of 3% a year -- is not just hiding behind temporary setbacks. It is gone forever." He cautions, "investors should be wary of a Fed whose policy is prefaced on the idea that 3% growth for the U.S. is normal."
Welcome to Dystopia!
by Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients today, chief investment strategist Jeremy Grantham warns: "We are five years into a severe global food crisis" that in the long term "will threaten global stability and global growth." An accompanying investment commentary by GMO head of asset allocation Ben Inker focuses on risks of eurozone equities, which he describes as "somewhere between fair value and mildly cheap" but not worthy yet of "a table-pounding endorsement."
My Sister's Pension Assets and Agency Problems
by Jeremy Grantham of GMO,
Investment behavior is driven by career risk. In the professional investment business we are all agents, managing other peoples money. The prime directive, as Keynes knew so well, is first and last to keep your job. To do this, he explained that you must never, ever be wrong on your own. To prevent this calamity, professional investors pay ruthless attention to what other investors in general are doing. The great majority go with the flow, either completely or partially. This creates herding, or momentum, which drives prices far above or far below fair price.
Investment Advice from Your Uncle Polonius
by Jeremy Grantham of GMO,
Believe in history. In investing Santayana is right: history repeats and repeats, and forget it at your peril. All bubbles break, all investment frenzies pass away. You absolutely must ignore the vested interests of the industry and the inevitable cheerleaders who will assure you that this time its a new high plateau or a permanently higher level of productivity. The market is gloriously inefficient and wanders far from fair price but eventually, after breaking your heart and your patience, it will go back to fair value. Your task is to survive until that happens. Heres how.
The Shortest Quarterly Letter Ever
by Jeremy Grantham of GMO,
Sadly, I feel increasingly vindicated by my seven lean years forecast of 2 years ago. The U.S., and to some extent the world, will not easily recover from the current level of debt overhang, the loss of perceived asset values, and the gross ?nancial incompetence on a scale hitherto undreamed of. Separate from the seven lean years syndrome, the U.S. and the developed world have permanently slowed in their GDP growth. This is mostly the result of slowing population growth, an aging pro?le, and an overcommitment to the old, which leaves inadequate resources for growth.
Danger: Children at Play
by Jeremy Grantham of GMO,
I am not an expert in euro ?nance by a wide margin. But I know one thing. Forget the debt for a second: the current uncompetitiveness of Greece, Ireland, Portugal, Spain, and Italy did not occur quickly. It took 10 long and obvious years. They had to work at it. The cure was always going to cause a lot of pain and threaten the well-being of the euro. So why didnt the bosses attempt to ? x it early on when it would have been so much easier? Today these problems have become much tougher, but still the decisions are only half made and the cans get kicked and kicked again.
Resource Limitations 2: Separating the Dangerous from the Merely Serious
by Jeremy Grantham of GMO,
Last quarter I tried to make the case that the inevitable mismatch between ?nite resources and exponential population growth had ?nally shown its true face after many false alarms. This was made manifest through a remarkably bubble-like explosion of prices for raw materials. Importantly, prices surged twice in four years, which is a most unbubble-like event in our history book. The data suggested to us that rarest of rare birds; a new paradigm. And a very uncomfortable one at that.
Time To Be Serious (and probably too early) Once Again
by Jeremy Grantham of GMO,
Lighten up on risk-taking now and don't wait for October 1. But, if you listen to my advice, be prepared to be early! A word on being too early in investing: if you are a value manager, you buy cheap assets. If you are very ?experienced,? a euphemism for having suffered many setbacks, you try hard to reserve your big bets for when assets are very cheap. But even then, unless you are incredibly lucky, you will run into extraordinarily cheap, even bizarrely cheap, assets from time to time, and when that happens you will have owned them for quite a while already and will be dripping in red ink.
Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever
by Jeremy Grantham of GMO,
The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value.
We all need to adjust our behavior to this new environment. It would help if we did it quickly.
I Like Ike: A Powerful Warning Ignored, January 17, 1961
by Jeremy Grantham of GMO,
Fifty years have gone by in a flash since President Eisenhower, three days from the end of his eight years in office, pushed to give an atypical end-of-term address to the people. It was not the most memorable speech given by an American President, but it was probably the most unusual and the most unexpected. Eisenhower?s speech, in contrast to most great speeches, appeared at the time to have come out of left field, and 50 years later it seems even more remarkable, unusual, and relevant. The speech gives us an opportunity to see how President Eisenhower might have graded us.
Night of the Living Fed
by Jeremy Grantham of GMO,
This is a summary of Grantham Mayo Von Otterloo chairman Jeremy Grantham's 3Q 2010 newsletter. Grantham notes that in the third year of a presidential cycle, risky, highly volatile stocks have outperformed low-risk stocks by an average of 18 percent per year since 1964. Levels of 1400 or 1500 on the S&P 500 one year from now are about a 50/50 bet. The biggest threats to this possibility are that Congress will initiate a new trade war, or that the Federal Reserve will start a currency dispute with quantitative easing.
Summer Essays
by Jeremy Grantham of GMO,
This is a summary of Jeremy Grantham's 2Q 2020 newsletter. Grantham says that weak a weak economy and declining or flat prices are likely for the immediate future. A global equity portfolio with annual returns of 6 percent plus inflation is still possible, however, by overweighting high quality U.S. stocks and underweighting other U.S. stocks. Grantham also comments on the financial reform bill, fear and speculation in the stock market, global warming, the 'seven lean years' hypothesis, aging populations and health care costs.
Playing With Fire (A Possible Race to the Old Highs)
by Jeremy Grantham of GMO,
Is there a new bubble on the horizon in the US? Having shot through GMO?s fair value estimate of 875, Jeremy Grantham's first quarter letter asks whether current policies and conditions are pushing the S&P to approach its old highs. Included in the letter is a link to a video of an interview about investment bubbles, done with Jeremy by the Financial Times on April 19. The Letters to the Investment Committee XVI is part one of a speech given by Jeremy discussing the Potential Disadvantages of Graham & Dodd-type Investing.
49 results found.
