GMO 4th Q Letter

[Parsad]

Grantham Mayo's 4th Quarter Letter is out.  Always a good read!  Cheers!

 

http://www.gmo.com/websitecontent/JGLetter_ALL_4Q09.pdf

[Mungerville]

Thks.  Been waiting for this one!

[oldye]

I think this guy is nuts.

[goldfinger]

why ?

[oldye]

 

 

He says something truly profound like

"What hope

do we really have in making accurate predictions of how

the world will recover from all of this, and in what ways

it will be changed? Very little."

 

The very next sentence is "My view of the economy’s future is boringly unchanged:

“Seven Lean Years.” I still believe that after the initial

kick of the stimulus, we will move into a multi-year

headwind as we sort out our extreme imbalances. This is

likely to give us below-average GDP growth over seven

years and more than our share of below-average profi t

margins and P/E ratios"

 

For someone that says its very difficult to make correct top down predictions he sure as heck seems to base his investment strategies around them. 

"So all investors should brace for the chance that speculation

will continue for longer than would have seemed remotely

possible six months ago. I thought last April that the

market (S&P 500) would scoot up to 1000 to 1100 on a

typical relief rally. Now it seems likely to go through

1200 and possibly higher. The market, however, is worth

only 850 or so; thus, any advance from here will make it

once again seriously overpriced,"

 

 

[philassor]

Thanks for the link:

 

I am starting to like that fellow; brainy and insightful.  Very impressive 1999-2009 forecast. The united corporations of america: priceless ( he stole it from me  ;)) the terrible  ratio of  heath care cost to  longevity compared to the insured world median: worth emphasizing. Finance as a drag to GDP: illuminating.

[QLEAP]

Thanks for posting this.

 

His letters are funny at times correlating Presidential cycles to the market but he has been bang on in terms of market forecast from what I understand.

 

The Wealthtrack podcast with Grantham is also very good - http://wealthtrack.libsyn.com/index.php?post_id=405724

[goldfinger]

Oldye,

 

That was my first reaction a while ago, but then if you take into consideration the amount of capital he has under management, his approach may make more sense. He is rather talented at what he does...

[Guest dealraker]

Grantham nuts?  Check out his investment record: BRILLIANT!

 

Some criticize him for staring at the floor or at the table top.  I don't care if he's sitting there cross-eyed.  With his success in predictions I'm gonna listen.

[twacowfca]

 

 

He says something truly profound like

"What hope

do we really have in making accurate predictions of how

the world will recover from all of this, and in what ways

it will be changed? Very little."

 

The very next sentence is "My view of the economy’s future is boringly unchanged:

“Seven Lean Years.” I still believe that after the initial

kick of the stimulus, we will move into a multi-year

headwind as we sort out our extreme imbalances. This is

likely to give us below-average GDP growth over seven

years and more than our share of below-average profi t

margins and P/E ratios"

 

For someone that says its very difficult to make correct top down predictions he sure as heck seems to base his investment strategies around them. 

"So all investors should brace for the chance that speculation

will continue for longer than would have seemed remotely

possible six months ago. I thought last April that the

market (S&P 500) would scoot up to 1000 to 1100 on a

typical relief rally. Now it seems likely to go through

1200 and possibly higher. The market, however, is worth

only 850 or so; thus, any advance from here will make it

once again seriously overpriced,"

 

 

Nuts?  By no means!  Fortune tellers always hedge their prognostications.  Neverless, he's in the 95th percentile.  :)