Thursday, November 11, 2010 0 comments ++[ CLICK TO COMMENT ]++

CNBC interview with Jeremy Grantham

Thanks to The Big Picture for bringing this Jeremy Grantham interview to my attention. For those not familiar, Grantham is the founder and key strategist at institutional fund advisor, GMO, and I consider him to be a macro-oriented value investor. Jeremy Grantham is the only value investor that I have run into who is also macro-oriented. A good interview, I would say.

You may want to read his quarterly letter released recently which is a good companion piece to this interview.

Grantham thinks the market is overvalued and urges caution. He is bullish on commodities in the long run (10 to 20 years) whereas I'm bearish on them. He favours high-quality blue-chip companies and prefers emerging markets over developed markets in the medium term (around 7 years).

He isn't a fan of the Quantitative Easing II that is being undertaken by the FedRes and thinks fiscal stimulus is the best solution right now. Unfortunately the US government is now likely to cancel any sort of stimulus program. I agree with Grantham on the stimulus suggestion but am not as negative of the FedRes.

Quantitative Easing II is a mystery to me. Recall how those with wild opinions like Marc Faber who expected Quantitative Easing an year ago said it would occur if the market is weak; yet the FedRes is pursuing this policy while most assets are reasonably priced or overvalued. I wonder if the FedRes is being directed by the US government (during the 1930's and 1940's, the FedRes was essentially taking orders from the government, especially when it came to buying the war bonds). Anyway, I just don't get it! What does the FedRes see that no one else does?


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