Jeremy Grantham (GMO)

Jeremy Grantham (GMO)

Postby readnlearn » Thu Nov 27, 2008 11:42 am

Jeremy Grantham's 1st appearance on TV :lol:

On this week's Consuelo Mack WealthTrack, a television exclusive with one of the most successful investors in modern times. For years, legendary value investor Jeremy Grantham has been the Cassandra of the investment community with warnings of financial and market disaster.

Grantham still sees danger in the global economy, but he has turned bullish on the U.S. stock market. In this, his first television interview, Grantham tells Consuelo Mack why he is now positive on stocks and what he sees ahead for the global financial system.

http://link.brightcove.com/services/pla ... 3012738001
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Re: Jeremy Grantham

Postby blid2def » Sat Jan 24, 2009 1:56 am

Much more pain to come, says fund manager
GMO's Grantham argues that expecting write-downs of $1 trillion to $2 trillion massively underestimates the problem

From MarketWatch:- http://tinyurl.com/d5yak7

Excerpt:
Jeremy Grantham, chairman at value shop GMO, said that he thinks there will be far more write-downs than is currently assumed, and that to reach the necessary debt levels the U.S. will suffer some serious pain.

"To be successful, we really need to halve the level of private debt as a fraction of the underlying asset values," said Grantham. "This implies that by hook or by crook, somewhere between $10 trillion and $15 trillion of debt will have to disappear."

...

Grantham believes that there are only three ways to bring private debt levels down in relation to reduced asset values: drastically write down debt, inflate the debt to reduce its real value or adopt the Japanese model of long-term saving.

"Each of the three realistic possibilities...would be extremely painful, each is loaded with uncertainties and even the quickest of them would take years," said Grantham.


Coincidentally, I'd just read about more or less the same thing (re: the mountain of private debt and practical difficulties in sorting it out... inflation as a very likely tool/scenario in the near future, etc.). The article is by John Kemp, a Reuters columnist:

U.S. and UK on brink of debt disaster

From Reuters :- http://blogs.reuters.com/great-debate/2 ... -disaster/
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Re: Jeremy Grantham

Postby iam802 » Sat Jan 24, 2009 2:53 am

I think this deserves some highlighting as well

From the MarketWatch article that GR posted above:
....


"But be prepared for a decline to new lows this year or next, for that would be the most likely historical pattern, as markets love to overcorrect on the downside after major bubbles," he warned. "Six hundred or below on the S&P 500 would be a more typical low than the 750 we reached for one day."

...
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Re: Jeremy Grantham

Postby kennynah » Sat Jan 24, 2009 2:54 am

got time....go read maine kempf... better..i think than to hear all these people saying market going up or down...

becos...eventually...it is going to be our opinion that will matter
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Re: Jeremy Grantham

Postby blid2def » Sat Jan 24, 2009 9:58 am

Sorry that you missed the key point of the 2 articles - or maybe you didn't read them. :D
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Re: Jeremy Grantham

Postby kennynah » Sat Jan 24, 2009 12:11 pm

u so know me so well.....i didnt read them :lol:
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Re: Jeremy Grantham

Postby winston » Thu Jan 29, 2009 8:25 pm

Famed money manager Jeremy Grantham says that the continuing credit crisis hampering global economic growth is largely the fault of poor leadership at the Federal Reserve and U.S. Treasury – a small clique of financial policymakers that now includes new Treasury Secretary Tim Geithner.

"Reviewing the last two years, of course, it's a misplaced trust in the competence of our leadership, from the very top. But certainly, notably, the Fed, the arch villains of this piece; Treasury, little better; the SEC," said Grantham in an interview with Steve Forbes in Forbes Magazine.

"They were cheerleaders, all of them. And they encouraged reckless leverage and low-quality debt. Complicated, unresearched, generally disgraceful."

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Re: Jeremy Grantham

Postby winston » Tue Mar 24, 2009 10:18 pm

Please read the following with a big pinch of salt..

A PermaBear Turns Bullish: 150% Gains Coming By Dr. Steve Sjuggerud

When would you rather buy the Nasdaq? On March 23, 2000, at 4,940... or yesterday, at 1,512?

Back in early 2000, one well-known professional investor turned incredibly bearish...

He's one of the few pros who invested during the last great bull market in the late 1960s. He'd just gotten out of school and he quickly made enough money in the stock market to pay off his debts, buy a BMW, and even a nice house.

Then he lost it all... Come 2000, he didn't forget the lesson. He called the top in the markets with more conviction than any other professional investor.

I have a ton of respect for him. He willingly gave up millions in fees from customers to stick with his belief that stocks were heading for a fall. Customers who didn't want to believe him simply took their money and gave it to managers who promised bigger gains.

But this investor turned out to be exactly right...

In early 2000, Jeremy Grantham predicted stocks would lose 3.9% per year annualized for the next 10 years.

Back then, he said:

I challenge anyone to tell me with a straight face that I'm using seriously bearish assumptions – because I'm most definitely not. My assumption of a 17.5 P/E is above average. My assumption of a 6% profit margin is way above average. And 4% sales growth is so high – so optimistic – that it's loony. And yet it still only gets me to a total return of a negative 1.9%...

If I assume a 2% sales growth instead, I arrive at an estimated return of a negative 3.9% per year. That's starts to get more like it – closer to reality.

He was predicting the worst 10-year period in history for U.S. stocks, including the Great Depression. We're nine years into his prediction. And he got it exactly right.

So what's Grantham saying today?

Today, Grantham is predicting the opposite of what he said in 2000. When the Nasdaq was at 5,000 he said sell. Now, he's saying buy.

He predicts that, over the next seven years, many different types of stocks will return just under 11% a year. (In particular, he says high-quality U.S. stocks, international small-cap stocks, and emerging-market stocks will make these returns.)

Grantham expects you could do even better – 13% a year (or more) over seven years in these areas – with active portfolio management. In plain English, you could turn $100,000 into nearly $250,000 in seven years.

Investors are worried about buying in now... They're worried about the banks and about unemployment. In Grantham's most recent article (available at www.gmo.com), he talked about this same scenario back in the Depression:

Long before all the banks had failed or unemployment had peaked, the S&P rallied 105% in six months...


The market does not turn when it sees a light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.

The man who called the 2000 peak with more conviction than any other professional investor is now calling the bottom...

The man who willingly gave up millions in potential fees from customers to stick to his principles is now finally optimistic on stocks.

We should listen...
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Re: Jeremy Grantham

Postby BlackCat » Sun May 10, 2009 11:06 pm

First, Thank you all for your kind sharing. Listening to this Grantham guy, whom I first came across here, helped to shape my value-investment strategy, and was one of the reasons I was lucky to be 50% invested (instead of zero percent) just after this rally took off.

The quote below sticks in my mind:

Life is simple: if you invest too much too soon you will regret it; “How could you have done this with the economy so bad, the market in free fall, and the history books screaming about overruns?” On the other hand, if you invest too little after talking about handsome potential returns and the market rallies, you deserve to be shot.


I agree with kennynah's sentiment that acting on market forecasts is useless....however this has helped shape my investment/trading philosophy, which is that I should be able to sleep no matter what the market does (includes worrying abt the market going up as well as down). Forecasts, both technical or fundamental, help me consider what the market can do, not what it will do.

Second, his May 09 quarterly letter is at the link below. Brief points here for those too tired to read:
* Uncertain what will happen. The bust is over, but at the previous low, stocks were not cheap enough compared to previous bear mkts.
* For the short term (by the end of the year), he sees 80% chance of the following. Due to stock markets over-sensitivity to massive economic stimulus, sees 2/3rd (out of the 80%) chance of S&P rally to 1000-1100. Alternatively, a 1/3 chance that this rally will crack and come down sharply in the near future. Small chance that the market will come down to a new low.
* Alternatively a 20% chance that the economies will not recover even with the stimulus.
* Either way, for long term: sees falling US property/stock asset prices - wipeout of 20 trillion dollars - Americans must save more, spend less. Profits down. Germans/Japanese/Chinese must spend more. Structural changes required --> 5-7 years of 2% growth. Expects secular bear market - up to 20 years before a new high reached.

The full 7 page report is at the bottom here. See the summary on the last page:
http://www.businessinsider.com/henry-blodget-grantham-roubini-wrong-stocks-going-to-moon-2009-5

For me I don't take the predictions too seriously. But think about how I could make money and limit risk in all these scenarios.
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Re: Jeremy Grantham

Postby kennynah » Mon May 11, 2009 12:03 am

BlackCat wrote:For me I don't take the predictions too seriously. But think about how I could make money and limit risk in all these scenarios.


i am with you here...
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