Grantham: Time to Dial Back Risk — Though It Might Be Too Early

GMO’s Jeremy Grantham has released the second half of his first-quarter letter, and in it he recommends dialing back risk — though he admits he may in the end prove to be a bit early on his call. Previously, Grantham had said he expected an already overvalued S&P 500 to push into the 1,400 to 1,600 range by October 1, riding the coattails of the Federal Reserve’s monetary policy. “The market may still get to,… Read More

Grantham: World in Midst of Huge Commodities “Paradigm Shift”

GMO’s Jeremy Grantham says that the world is in the midst of a “paradigm shift”, one that involves a skyrocketing population and dwindling resources. And, if we don’t act soon, the shift will leave us in serious trouble. “Accelerated demand from developing countries, especially China, has caused an unprecedented shift in the price structure of resources: after 100 hundred years or more of price declines, they are now rising, and in the last 8 years… Read More

Grantham, GMO See Small Cap Trouble

While small-cap stocks have had an excellent run, top value investor Jeremy Grantham and his firm aren’t too high on the little guys going forward. GMO, Grantham’s firm, has released its new seven-year asset class projections, and the “latest calculations predict that investors in U.S. small-cap stocks will actually lose about a fifth of their money in real terms over the next seven or so years,” reports MarketWatch’s Brett Arends. “That’s an annualized loss of… Read More

Grantham Growing Bearish

GMO’s Jeremy Grantham says people may be underestimating the impact the Japan crisis will have on the rest of the world, and says he’s growing less confident that the “Presidential Cycle” effect will boost stocks for the remainder of this year. “What people will find, and what they might have underestimated, are the tentacles that Japan Inc. sends out around the world,” Grantham tells MarketWatch. “This could be a bigger factor for other countries than… Read More

Grantham Planning to Cut Back on Equities

GMO’s Jeremy Grantham is planning to cut back on his equity holdings, though he thinks stocks could continue to rise in the short term before hitting a roadblock, reports. Grantham told investors at Charles Schwab’s Investment Outlook 2011 conference that stocks are “dangerously overpriced,” according to TheStreet. But he said he expects the S&P 500 to climb to about 1,500 before the end of its big run. Among Grantham’s concerns for the U.S. economy… Read More

Grantham on Why Bubbles Matter

In the second half of his year-end letter, GMO’s Jeremy Grantham takes a look at numerous asset bubbles throughout history, warning investors to ignore bubbles at their own peril. “Responding to the ebbs and flows of major cycles and saving your big bets for the outlying extremes is, in my opinion, easily the best way for a large pool of money to add value and reduce risk,” Grantham writes. “In comparison, waiting on the railroad… Read More

Grantham on Commodities, The Presidential Cycle & What Whale Sightings Mean for Investors

GMO’s Jeremy Grantham has released his fourth-quarter 2010 letter to shareholders, and Part I of his always-intriguing commentary is filled with short-term bullishness and long-term bearishness. “Be prepared for a strong market and continued outperformance of everything risky,” Grantham writes, citing stimulative Federal Reserve policy and the fact that we’re in the third year of the Presidential Cycle, which traditionally bodes very well for stocks. “But be aware that you are living on borrowed time… Read More

Yacktman, Stattman Still High on Big Blue Chips

Several top value managers who keyed on large stocks — to their portfolios’ detriment — in 2010 are continuing to focus on big blue chips as we head into 2011. Among them: Donald Yacktman, whose funds have trounced the market over the longer haul but lagged in 2010. “In 40 years I have rarely seen a situation where so many big, profitable international companies are selling at such relatively cheap prices,” Yacktman told Bloomberg. Another… Read More

Grantham Says There’s Value in Cash

GMO’s Jeremy Grantham says that both bonds and stocks are overpriced, and that investors should have a substantial portion of their portfolios in cash, allowing them to take advantage when good opportunities do present themselves. “The Fed is driving the S&P [500], which is overpriced … driving it from already substantially overpriced into what I would call dangerously overpriced,” Grantham told CNBC in a lengthy interview. “It wants us to go out there and buy… Read More

Grantham Bashes The Fed, Still Likes High Quality

In his latest market commentary, GMO’s Jeremy Grantham says the Federal Reserve has caused extensive damage to the economy by its manipulation of interest rates and asset prices, and is continuing to do so. Grantham’s lengthy letter (it runs 16 pages) covers a variety of topics. A few highlights: He says that, contrary to popular belief, high debt levels do nothing to stimulate higher GDP growth rates. “In the real world, growth depends on real… Read More