Tag Archives: Jeremy Grantham

Why Mutual Fund Managers May Not Act in Your Best Interest

Jeremy Grantham has produced yet another truly outstanding essay in GMO’s Quarterly Letter to Investors for April 2012.  Never reluctant to take on controversy, he focuses on the ways in which mutual fund managers have strong incentives to behave in ways that are often not in the best interests of investors in their funds.  In the academic world, these perverse incentives are referred to as “agency problems.” 

A mutual fund manager makes decisions on behalf of his or her fund’s investors.  In the parlance of economics, the manager acts as an agent working on behalf of the investors (the meaning here is similar to the use in the term real estate agent).  Continue reading

GMO’s Lean Investment Outlook

Bob Huebscher over at Advisor Perspectives just published an interesting article that gives an overview of Grantham, Mayo, van Otterloo & Co.’s (GMO) outlook for the coming years. The article is based on a talk given by Ben Inker, head of asset allocation at GMO.

Most investors who are aware of GMO first encounter the Boston-based investment management firm by reading some of the brilliant essays of Jeremy Grantham, one of the firm’s founders. Grantham’s market outlooks have historically been prescient.

A Bleak Outlook?

GMO’s broad outlook for investors — the firm manages $107 billion in assets — has changed since last year. Continue reading

Jeremy Grantham’s Investing Outlook for 2011, and Beyond

Jeremy Grantham founder of Boston-based asset manager and mutual fund firm GMO, has published his investing outlook for 2011.

As usual it’s great fun to read and full of things to worry about. Continue reading

Jeremy Grantham Talks Asset Allocation, the Fed and Where He’s Advising Clients to Invest

Famous investor and predictor of bubbles, Jeremy Grantham finds a lot to worry about these days. For starters he’s no fan of the Federal Reserve’s ongoing behavior. Also, he’s pretty sure “we’re running out of everything” when it comes to commodities. And Grantham thinks the S&P 500, currently trading at 1178 is more properly valued at 900. His advice to the clients of his firm, Grantham Mayo Van Otterloo (GMO), is predictably circumspect: pile up cash so you can buy when the current, growing US equities bubble bursts, overweight great franchise companies like Coca-Cola (KO) and Johnson & Johnson (JNJ), modestly overweight emerging markets and “underweight everything else.” Oh, and one more thing: “patience.”

If he wasn’t so charming to listen to, Grantham would really be depressing. Though he thinks the economy will “muddle through” that’s about as positive as he got in the course of a very good video interview (video below) with CNBC’s Maria Bartiromo. Continue reading