Jeremy Grantham’s latest quarterly newsletter is on the GMO website and as usual it is an educational, pragmatic and brilliant read. There is so much to take away from this one. There are three parts to his ‘longest quarterly letter ever’…
1. Investment advice from your Uncle Polonius
…which contains 10 absolute must read points. One of my many favourite bits …
To be at all effective investing as an individual, it is utterly imperative that you know your limitations as well as your strengths and weaknesses. If you can be patient and ignore the crowd, you will likely win. But to imagine you can, and to then adopt a flawed approach that allows you to be seduced or intimidated by the crowd into jumping in late or getting out early is to guarantee a pure disaster. You must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely MUST NOT manage your own money.
2. Your Grandchildren have no value
part of his conclusion in this different perspective is…
Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence. Fifty and one-hundred-year horizons are important despite the “tyranny of the discount rate,” and grandchildren do have value.
3. Investment Observations of the New Year
He provides his market outlook for short, medium and long-term and I won’t spoil what his specific calls are other than he is bullish, bearish and fair value…but not in the same order…sorry about that
Jeremy Grantham is undoubtedly one of the deepest thinkers in the investment world and his quarterly letter is a must read for anyone who wants to better understand the potential impacts of the major issues of our world on investment markets. I know its a long read, although at 15 pages its not really long as you’ll get more out of this than virtually any book you’re likely to find on investing.
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