Jeremy Grantham’s 1Q12 letter

Another fantastic quarterly letter from Mr. Grantham, I was reading this on the plane to and from Myanmar last week and he talks about his current asset allocation thoughts and how career risk plays a role in the investment industry today. For my team and I it really does explain the situation we are in today because we are faced with this amazingly strong market here in Thailand that is just ignoring all the negative news globally to valuation levels we haven’t seen since the 90’s and we are not fully invested in it.

The central truth of the investment business is that investment behavior is driven by career risk.

Ridiculous as our market volatility might seem to an intelligent Martian, it is our reality and everyone loves to trot out the “quote” attributed to Keynes (but never documented): “The market can stay irrational longer than the investor can stay solvent.” For us agents, he might better have said “The market can stay irrational longer than the client can stay patient.” Over the years, our estimate of “standard client patience time,” to coin a phrase, has been 3.0 years in normal conditions.

Source: GMO Website

If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have future articles delivered to your feed reader.

2 thoughts on “Jeremy Grantham’s 1Q12 letter”

    1. There’s a lot I’d like to say to support your comment!!! But I suppose its part n parcel of the industry for us to help educate investors that patience is an absolute necessity when it comes to investing.

Leave a Reply

Your email address will not be published. Required fields are marked *