Invest Like the Best with Patrick O'Shaughnessy

Jeremy Grantham – An Uncertain Crisis - [Invest Like the Best, EP.177]

Jun 9, 2020

Jeremy Grantham, co-founder and chief investment strategist of GMO, shares his insights on navigating today’s turbulent market. He discusses the uniqueness of the current crisis, forecasting challenges, and the evolving landscape of investing amidst uncertainty. Grantham dives into the impact of FAANG companies on traditional investing and argues for the importance of sustainable practices in a world constrained by resources. His thoughts on opportunity amidst competitive markets spark a compelling conversation about future investment strategies.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Mean Reversion and Monopolies

Mean reversion, the idea that asset classes revert to historical norms, underlies asset allocation strategies.
Increased monopolies and corporate influence have weakened this process.

ANECDOTE

Navigating the Tech Bubble

Jeremy Grantham discusses GMO’s generally successful approach to historical bubbles like the tech bubble of 2000.
He explains how they profited from the crash by investing in cheaper alternatives.

INSIGHT

A Novel Crisis

Jeremy Grantham identifies the current crisis as the fourth major market event of his career.
This crisis is novel due to unique factors, like simultaneous supply and demand hits.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

My guest today is Jeremy Grantham. Jeremy is the co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (aka GMO). GMO, which manages more than $60B for clients, was a firm that helped educate me early in my investing career. They’ve long published thought-provoking research, most of which came from Grantham himself. He is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, but is particularly noted for his prediction of various bubbles. In this conversation we discuss the current crisis, which he calls the fourth major event of his long and storied career as an investor. As he says, this one is the most uncertain. We also discuss unique topics like commodity-based companies, and how opportunity often lies between fields of expertise. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

(1:37) – (First question) – What keeps him going in investing

(2:54) – Changing approaches to managing money over the decades

(7:27) – Their investment forecast for major allocations and how that has evolved

(10:06) – How to markets compete with FAANG stocks

(16:06) – More opportunity for active investors and where

(30:55) – How he talks to clients about major stock market events

(34:09) – His interest in natural resources/commodities

(47:07) – Long term argument for the three natural resources: oil, metals, and food

(47:10) – An Investment Only A Mother Could Love: The Tactical Case

(52:01) – Specific case for particular metals

(56:46) – Areas in the future that excite him or that he wants to learn more about

(1:03:42) – Advice for people interested in investing

(1:05:15) – Kindest thing anyone has done for Jeremy

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on Twitter at @patrick_oshag