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What the Beta Puzzle Tells Us about Investing
by David Cowan and Sam Wilderman of GMO, 11/18/11
One anomaly that has generated considerable discussion recently in both academic and practitioner circles is what one might call the 'beta puzzle': portfolios of low beta stocks have historically matched or beaten broader equity market returns, and have done so with significantly lower volatility. At the same time, high beta stocks have significantly underperformed, exhibiting lower returns while appearing to take much more risk.

Et tu, Berlusconi? The Daunting (But Not Always Insuperable) Arithmetic of Sovereign Debt
by Rich Mattione of GMO, 10/28/11
This paper sets itself two tasks. The first is to construct a simple model that would arithmeticize the dynamics of sovereign debt so as not to get hung up with all of the acronyms and programs designed to save the world. The second is to put this into the context of the European sovereign debt problem and hazard some opinions as to which options can work, and which cannot. Grand solutions may yet come, but they probably will not come soon enough. Now is the time to separate the daunting from the insuperable, and to fix both sets of nations.

Danger: Children at Play
by Jeremy Grantham of GMO, 8/10/11
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, 7/22/11
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.

A Value Investor?s Perspective on Tail Risk Protection: An Ode to the Joy of Cash
by James Montier of GMO, 6/28/11
The range of tail risk protection products seems to be exploding. Investment banks are offering ?solutions? to investors and fund management companies are launching ?black swan? funds. There can be little doubt that tail risk protection is certainly an investment topic du jour. The very popularity of this alone should spell caution to investors. Effectively, you should seek to buy insurance when nobody wants it. An alternative way of phrasing this is to say that insurance (and that is exactly what tail risk protection is) is as much of a value proposition as any other element of investing.

Time To Be Serious (and probably too early) Once Again
by Jeremy Grantham of GMO, 5/11/11
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, 4/25/11
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.

The Seven Immutable Laws of Investing
by James Montier of GMO, 3/11/11
This dearth of assets offering a margin of safety raises a conundrum for the asset allocation professional: what does one do when nothing is cheap? Personally, I?d seek to raise cash. This is obvious not for its uninspiring near-zero yield, but because it acts as dry powder ? a store of value to deploy when the opportunity set offered by Mr. Market becomes more appealing. And this is likely, as long as the emotional pendulum of investors oscillates between the depths of despair and irrational exuberance as it always has done. Of course, the timing of these swings remains as nebulous as ever.

Pavlov?s Bulls
by Jeremy Grantham of GMO, 1/26/11
About 100 years ago, the Russian physiologist Ivan Pavlov noticed that when the feeding bell was rung, his dogs would salivate before they saw the actual food. They had been ?conditioned.? And so it was with ?The Great Stimulus? of 2008-09.

I Like Ike: A Powerful Warning Ignored, January 17, 1961
by Jeremy Grantham of GMO, 1/18/11
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, 10/28/10
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, 7/20/10
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, 4/25/10
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.

Was It All Just A Bad Dream? Or, Ten Lessons Not Learnt
by James Montier of GMO, 2/26/10
Montier reflects on ten lessons the investment industry did not learn during the market declines of 2008 and 2009. He says that it is time to abandon the efficient market hypothesis and acknowledge the role the housing bubble played in the financial crisis. In addition, he notes that the principles of value investing still hold true: Buy when assets are cheap, and sell when they are expensive.

Stop the Presses!
by Jeremy Grantham of GMO, 1/26/10
Grantham?s commentary begins with his reflections on the proposed financial reform, the ?Volcker Plan,? and the recent Supreme Court ruling on corporate campaign contributions. He continues with a fo
Results 301–315 of 315 found.