In an interview with Charlie Rose for Bloomberg BusinessWeek, GMO’s Jeremy Grantham says he’s going to be quite cautious in 2013.

“I am going to be careful, particularly for the first half of next year,” Grantham says. “Great brands of blue chips are not so bad in the U.S. Emerging countries are about fair price. Beaten-down European stocks, particularly the so-called value stocks, are probably a little cheap, although risky. And resource stocks, once they reflect the weak economy — and we’ll get another whack-down — will be a wonderful long-term purchase. Farmland and forests, which should be the backbone of any long-term, serious portfolio. … It will also be a good time to buy in.”

Grantham says he’s a big believer in the Presidential Cycle being a driver of returns, and that the first years of the four-year cycles tend to be weak for stocks. He adds that with Republicans threatening to add fiscal constraints to an already weak U.S. economy, and Europe’s and China’s troubles lingering, 2013 should be “a really good year to keep your head down.”

Grantham also says he thinks the U.S. debt situation is “exaggerated”, and that education levels, capital spending, the quality of innovation, and technology are issues that should be focused on. And he discusses how soaring resource prices have shaved three points off global GDP in the past decade.