Jeremy Grantham: 70% EM value+30% cash
Jeremy Grantham: 70% EM value+30% cash
Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
When everyone is thinking the same, no one is thinking at all
Re: Jeremy Grantham: 70% EM value+30% cash
He was predicting crushing stock market as long as I remember him, for decades. He is a permanent bear and selling his lectures and books his main income source. He is like a broken clock that can be right twice a day. Eventually he will be right ones and , again you asking wrong question on this forum . This forum of investors and not speculators. The question to you . Do you think he will be right 45% down stock market from the pic? Or from ten years ago pic? Lol
Another genius- Robert Keosaki , the same he was predicting crush since 2011. He is saying buy crypto and gold. Another mental brake down cookout
Another genius- Robert Keosaki , the same he was predicting crush since 2011. He is saying buy crypto and gold. Another mental brake down cookout
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: Jeremy Grantham: 70% EM value+30% cash
Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
Re: Jeremy Grantham: 70% EM value+30% cash
So you would avoid Europe Japan etc?DanFFA wrote: ↑Sat Jan 22, 2022 4:15 am Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
When everyone is thinking the same, no one is thinking at all
Re: Jeremy Grantham: 70% EM value+30% cash
I don't think he is a speculator I think he is a value investorEd 2 wrote: ↑Sat Jan 22, 2022 4:05 am He was predicting crushing stock market as long as I remember him, for decades. He is a permanent bear and selling his lectures and books his main income source. He is like a broken clock that can be right twice a day. Eventually he will be right ones and , again you asking wrong question on this forum . This forum of investors and not speculators. The question to you . Do you think he will be right 45% down stock market from the pic? Or from ten years ago pic? Lol
Another genius- Robert Keosaki , the same he was predicting crush since 2011. He is saying buy crypto and gold. Another mental brake down cookout
When everyone is thinking the same, no one is thinking at all
Re: Jeremy Grantham: 70% EM value+30% cash
I wouldn't. I'm saying it's not a terrible idea if someone (i.e. Jeremy Grantham) wanted to focus the ex-us entirely on EM.Lauretta wrote: ↑Sat Jan 22, 2022 4:20 amSo you would avoid Europe Japan etc?DanFFA wrote: ↑Sat Jan 22, 2022 4:15 am Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
Larry Swedroe's equity allocation is 50% AVUV, 25% AVDV, 25% AVEM currently the last I checked. (AVEM may have been switched out for AVES)
Last edited by DanFFA on Sat Jan 22, 2022 4:25 am, edited 1 time in total.
Re: Jeremy Grantham: 70% EM value+30% cash
So, there. His value is not my value. If you followed his advice for all this years you wouldn’t be on this forum worrying about your assets allocation , because it ain’t be any . My own opinion, of course.Lauretta wrote: ↑Sat Jan 22, 2022 4:21 amI don't think he is a speculator I think he is a value investorEd 2 wrote: ↑Sat Jan 22, 2022 4:05 am He was predicting crushing stock market as long as I remember him, for decades. He is a permanent bear and selling his lectures and books his main income source. He is like a broken clock that can be right twice a day. Eventually he will be right ones and , again you asking wrong question on this forum . This forum of investors and not speculators. The question to you . Do you think he will be right 45% down stock market from the pic? Or from ten years ago pic? Lol
Another genius- Robert Keosaki , the same he was predicting crush since 2011. He is saying buy crypto and gold. Another mental brake down cookout
My portfolio includes Us equity 60% , International 35% , fixed income bonds and cash 5% for decades with 15% return year over year .
Good luck , Ed
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: Jeremy Grantham: 70% EM value+30% cash
Alright I'll check but I am not sure those funds are available here in Europe. Also I think that his philosophy is based ona barbell portfolio where you hold a lot of Bonds or cash.DanFFA wrote: ↑Sat Jan 22, 2022 4:23 amI wouldn't. I'm saying it's not a terrible idea if someone (i.e. Jeremy Grantham) wanted to focus the ex-us entirely on EM.Lauretta wrote: ↑Sat Jan 22, 2022 4:20 amSo you would avoid Europe Japan etc?DanFFA wrote: ↑Sat Jan 22, 2022 4:15 am Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
Larry Swedroe's equity allocation is 50% AVUV, 25% AVDV, 25% AVEM currently the last I checked. (AVEM may have been switched out for AVES)
In the Current environment if not a good idea to hold a lot of bonds imo so I think it's better to have a greater allocation to less volatile stocks like large caps.
When everyone is thinking the same, no one is thinking at all
Re: Jeremy Grantham: 70% EM value+30% cash
The problem with this, is when does one decide to terminate the regional & value tilt? I think it's easier to simply go 50-50 global TSM stocks & global value stocks, and rebalance from there. If EM SCV is cheap, it follows that US SCV will also have handsome returns. Overweighting countries & regions will result in a later change of mind, just invest globally, tilt with factors not geography.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
Amateur Self-Taught Senior Macro Strategist
Re: Jeremy Grantham: 70% EM value+30% cash
I’ll bet his firm, GMO (Grantham, Mayo and vanOtterloo), doesn’t actually do what he is recommending. If that’s the case, why should the public pay any attention to his periodic rants?
Re: Jeremy Grantham: 70% EM value+30% cash
Bait and click publications for his firm and books . Every year on every market correction or dip this guys are coming to TV with their gloomy predictions. It happens every year , people forget. They making money on fear.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: Jeremy Grantham: 70% EM value+30% cash
First of all, Jeremy Grantham has been in the investing game for a long time, and there have been periods when he was wrong and periods when he was right. He, or at least the people in his firm who make the asset class forecasts, have been wrong about emerging for at least seven years. Not just a little wrong, seriously wrong. To start following his advice now is a kind of market timing bet.
It is a bet that this is the moment when he is coming out of a period of being wrong and entering a period of being right. More below.
Unless a guru is actually telling retail investors specifically what to do, and does it regularly, I think it's positively harmful to listen to some kind of news sound bite, or interview, or read some blog posting, that talks about asset classes and the future in some general way, and try to translate these into specific actions to take in a retail portfolio now.
If you have the wherewithal to become a GMO client--"Since our founding, GMO has worked with sophisticated families and their representatives to safeguard and grow wealth"--that might be a reasonable idea. In fact it's quite possible that the reason people like Grantham make public statements is in hopes that a tiny fraction of the people who hear them are sophisticated families who might become GMO clients.
We can look at their 2014 asset return forecast and see that, as I expected, their forecast
called for emerging market stocks to outperform US large by a whopping 5.3%.* Over seven years, that's a forecast that $10,000 invested in emerging markets stocks ought to end up with 1.44X as much money as the same amount invested in US large stocks.
Of course, what really happened, 6/15/2014 to 6/15/2021, was:
So, despite a specific forecast that
emerging markets (blue line) would, outperform US large caps (yellow line) by 5.4%,
what actually happened was that
US large caps outperformed emerging markets by 7.7%**
That's really pretty bad, considering this isn't based on how things look today, but took into account whatever GMO thought it knew back in 2014.
The red line is one of the few available emerging markets value funds, and it did even worse.
I don't know if Grantham specifically advised 70% emerging markets value, 30% cash back in 2014. That's a big problem with guru soundbites, there's no continuity or uniformity. But we certainly can, if we like, see how what he is suggesting now--70% emerging markets value, 30% cash--would have compared to the Vanguard LifeStrategy Moderate and Growth funds (60% and 80% stocks respectively).
Source
If you take off the date restriction and look at all available data,--click link to see chart--you can see why he might have made his suggestion. But it is clearly a market timing gamble. It will, of course, pay off if we have a return to the glory days of 2004-2007 in emerging markets.
*Actually the difference is so big that I ought to do the technically correct "geometric sum" calculation, 1.036/0.983 - 1 = 5.39%.
**7.7% by simple arithmetic, again, more accurately, really only 7.2%
It is a bet that this is the moment when he is coming out of a period of being wrong and entering a period of being right. More below.
Unless a guru is actually telling retail investors specifically what to do, and does it regularly, I think it's positively harmful to listen to some kind of news sound bite, or interview, or read some blog posting, that talks about asset classes and the future in some general way, and try to translate these into specific actions to take in a retail portfolio now.
If you have the wherewithal to become a GMO client--"Since our founding, GMO has worked with sophisticated families and their representatives to safeguard and grow wealth"--that might be a reasonable idea. In fact it's quite possible that the reason people like Grantham make public statements is in hopes that a tiny fraction of the people who hear them are sophisticated families who might become GMO clients.
We can look at their 2014 asset return forecast and see that, as I expected, their forecast
called for emerging market stocks to outperform US large by a whopping 5.3%.* Over seven years, that's a forecast that $10,000 invested in emerging markets stocks ought to end up with 1.44X as much money as the same amount invested in US large stocks.
Of course, what really happened, 6/15/2014 to 6/15/2021, was:
So, despite a specific forecast that
emerging markets (blue line) would, outperform US large caps (yellow line) by 5.4%,
what actually happened was that
US large caps outperformed emerging markets by 7.7%**
That's really pretty bad, considering this isn't based on how things look today, but took into account whatever GMO thought it knew back in 2014.
The red line is one of the few available emerging markets value funds, and it did even worse.
I don't know if Grantham specifically advised 70% emerging markets value, 30% cash back in 2014. That's a big problem with guru soundbites, there's no continuity or uniformity. But we certainly can, if we like, see how what he is suggesting now--70% emerging markets value, 30% cash--would have compared to the Vanguard LifeStrategy Moderate and Growth funds (60% and 80% stocks respectively).
Source
If you take off the date restriction and look at all available data,--click link to see chart--you can see why he might have made his suggestion. But it is clearly a market timing gamble. It will, of course, pay off if we have a return to the glory days of 2004-2007 in emerging markets.
*Actually the difference is so big that I ought to do the technically correct "geometric sum" calculation, 1.036/0.983 - 1 = 5.39%.
**7.7% by simple arithmetic, again, more accurately, really only 7.2%
Last edited by nisiprius on Sat Jan 22, 2022 7:46 am, edited 4 times in total.
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Re: Jeremy Grantham: 70% EM value+30% cash
We all here know what he is. I guess some needs a refresh reminders constantly because they use wrong part of the brain and doing things wrong way, wrong time. Him, Robert Keosaki, Bill Ackman and others manipulators
In addition, I suspect we see the bottom of this small dip . One’s this permabears coming it’s usually the sign for market starts recovering.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: Jeremy Grantham: 70% EM value+30% cash
every pension fund is second guessing why they should invest in a expensive hedge fund and pay 2% on Assets/ 20% profit.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
These kind of pronouncements are for folks not to jump ship from his under performing hedge fund.
Same is true for Ray Dalio.
All these folks who manager other people's are very bearish always.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
Re: Jeremy Grantham: 70% EM value+30% cash
I read somewhere 5-10 years back where Grantham said he was putting all his sister's money in EM. His firm Grantham, Mayo, & van Otterloo now has about $63 Billion under management, down from a high of $124 Billion in 2014. That is a big hit to AUM.
Dave
Dave
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Re: Jeremy Grantham: 70% EM value+30% cash
Crazy Dave. Do you think his sister still talks to him?
Tony
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Re: Jeremy Grantham: 70% EM value+30% cash
There is something to be said for the barbell concept. Have a big allocation to the safest asset class and have the risk investments in very high risk investments. This, I believe, is the philosophy of Taleb.
Dave
Dave
Re: Jeremy Grantham: 70% EM value+30% cash
I bet his sister is reading here on the forum looking for the ideal portfolio.
Dave (the other Dave)
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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Re: Jeremy Grantham: 70% EM value+30% cash
The problem with making forecasts like this is that the market may not agree with you in the short term. Of course Grantham has been making these calls for many years, but what if the next decade goes such that you would have come out ahead if you started following his advice in 2010. Does that mean he was right? But who has two decades to determine if someone was right?
Re: Jeremy Grantham: 70% EM value+30% cash
In Europe the funds ZPRV, ZPRX and EMVL come reasonably close to that portfolio (although it misses Japan, Canada, Australia etc). EMVL could be replaced by DGSE/WTED.Lauretta wrote: ↑Sat Jan 22, 2022 4:36 amAlright I'll check but I am not sure those funds are available here in Europe. Also I think that his philosophy is based ona barbell portfolio where you hold a lot of Bonds or cash.DanFFA wrote: ↑Sat Jan 22, 2022 4:23 amI wouldn't. I'm saying it's not a terrible idea if someone (i.e. Jeremy Grantham) wanted to focus the ex-us entirely on EM.Lauretta wrote: ↑Sat Jan 22, 2022 4:20 amSo you would avoid Europe Japan etc?DanFFA wrote: ↑Sat Jan 22, 2022 4:15 am Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
Larry Swedroe's equity allocation is 50% AVUV, 25% AVDV, 25% AVEM currently the last I checked. (AVEM may have been switched out for AVES)
In the Current environment if not a good idea to hold a lot of bonds imo so I think it's better to have a greater allocation to less volatile stocks like large caps.
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Re: Jeremy Grantham: 70% EM value+30% cash
She sent me a message. I recommended she put it all in Fundrise!
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Re: Jeremy Grantham: 70% EM value+30% cash
Grantham is a charlatan. Like an astrologer or fortune teller he claims he can divine the future.
Re: Jeremy Grantham: 70% EM value+30% cash
As I stated in another thread, Grantham and others like him with similar views are fighting the Fed and Govt, screaming from the sidelines that what they are doing is wrong, while having no power by themselves to change anything. The fundamental disagreement that these folks have over Fed and Govt stimulus is creating excess asset prices that leads to massive bubbles is the reason why their forecasts are contently coming negative for markets such as US where massive stimulus is deployed to combat the effects of financial downturns. Grantham and others like would rather have assets crash and burn during the financial crisis, he would have preferred Fed and Govt to have issued a smaller stimulus during Covid-19, let unemployment soar and let people be out of homes if that is what it meant, so long as we didn't end up in Great Depression they would be okay with the resulting pain. Then they would be satisficed that asset prices are reasonable. However, the Fed and Govts have a different job since they are in charge and responsible unlike folks like Grantham who has no such responsibilities, therefore he can stay on the sidelines are criticize the Fed and Govt.
Bottomline, we would never know if the stimulus is too much or too less, because it isn't a hard science and they try their best, sometimes it leads to asset bubbles, and excess returns, which may take a few years to then wind down. So what? no one should expect S&P 500 to return 25% per annum as it did in last 3 years, and if it averages out to 8% per annum over a 10 year period by wiping off some of that 25% per annum excess with a couple of negative years, then so be it. That's why it's called the market average, and that's why we invest for long term, taking in the good years and the bad years. It's impossible to second guess the Fed and the market, and the effects of money policy is right or not and whether asset prices are right or not. The odds of us getting a market average that is higher than our timing efforts using valuation models are better, that's what history teaches us. Now, everyone should check their risk controls in their portfolio and adjust if the last 3 years have resulted in their portfolio going too heavy on equities and too heavy on US equities, but then that should already be part of our IPS.
Bottomline, we would never know if the stimulus is too much or too less, because it isn't a hard science and they try their best, sometimes it leads to asset bubbles, and excess returns, which may take a few years to then wind down. So what? no one should expect S&P 500 to return 25% per annum as it did in last 3 years, and if it averages out to 8% per annum over a 10 year period by wiping off some of that 25% per annum excess with a couple of negative years, then so be it. That's why it's called the market average, and that's why we invest for long term, taking in the good years and the bad years. It's impossible to second guess the Fed and the market, and the effects of money policy is right or not and whether asset prices are right or not. The odds of us getting a market average that is higher than our timing efforts using valuation models are better, that's what history teaches us. Now, everyone should check their risk controls in their portfolio and adjust if the last 3 years have resulted in their portfolio going too heavy on equities and too heavy on US equities, but then that should already be part of our IPS.
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Re: Jeremy Grantham: 70% EM value+30% cash
Excellent post, Elysium. Mr. Grantham is waiting for the super-bubble to crash. He has been waiting for the crash and predicting it over and over for years. 15 years of aggressive stimulatory action by the FED plus massive federal fiscal stimulus has in my opinion been necessary to avoid a second Great Depression that was a real possible outcome of the GFC 2007 - 2009. They didn't do that in 1929 -1932 and the nation and its people suffered until massive deficit spending in WW2 finally stimulated the economy sufficiently to climb out the unemployment/deflation hole. The downside of these necessary actions have been asset price inflation. Grantham is right about that, but he assumes that stocks/real estate must return to some historical mean level of valuation to reach equilibrium. IMO Grantham is wrong about that. Governments have discovered and adopted the policy of priming the pump and supporting asset prices to blunt the impact of a severe bear market, rising unemployment, and a recession. They will do it again and again, it they see the need. The only thing that will derail this is very persistent and very substantial inflation in which case the party is over. Stimulatory policies make inflation worse and stagflation can raise its ugly head.
The thing that I hope and believe will prevent that stagflation outcome is the aging demographics, technology innovations, current high levels of household debt that reduce future demand, and ongoing globalization--all of which are anti-inflationary secular forces that aren't going to disappear anytime soon. I don't personally accept Grantham's idea that we're in stock market bubble now even though PEs are much higher than historical averages. I don't personally believe that we'll ever return to those long term PE averages. There are clearly bubble pockets in some areas of tech but I see the current correction in these over-hyped names as very healthy for the market's future. Pessimism prevents formation of true bubbles and there is no shortage of investor pessimism right now. In fact, Grantham and other market pessimists are helpful as a countermeasure to excessive optimism in MEMEs, SPACs, etc..
The market has not been kind in recent months to ARKK type stocks with great future expectation narratives but no profits. Meanwhile value stocks are most definitely not in a bubble IMO. I believe Grantham's current prediction is wrong about a near term 40+ collapse in stocks. I agree that our best investing days may well be behind us. I think we'll be lucky to get mid-single digit equity returns going forward, but I'm not preparing for a market collapse. Grantham has been predicting doom for so long, same advice, advising us to avoid US stocks and load up on EM value. A broken clock is correct twice a day but that is much better than Grantham's record. I believe it is prudent for those concerned about current valuations after such massive gains in the last few years to take a careful look at their portfolio and consider modestly increasing allocation to areas that clearly are not overvalued like INTL and value stocks.
Garland Whizzer
The thing that I hope and believe will prevent that stagflation outcome is the aging demographics, technology innovations, current high levels of household debt that reduce future demand, and ongoing globalization--all of which are anti-inflationary secular forces that aren't going to disappear anytime soon. I don't personally accept Grantham's idea that we're in stock market bubble now even though PEs are much higher than historical averages. I don't personally believe that we'll ever return to those long term PE averages. There are clearly bubble pockets in some areas of tech but I see the current correction in these over-hyped names as very healthy for the market's future. Pessimism prevents formation of true bubbles and there is no shortage of investor pessimism right now. In fact, Grantham and other market pessimists are helpful as a countermeasure to excessive optimism in MEMEs, SPACs, etc..
The market has not been kind in recent months to ARKK type stocks with great future expectation narratives but no profits. Meanwhile value stocks are most definitely not in a bubble IMO. I believe Grantham's current prediction is wrong about a near term 40+ collapse in stocks. I agree that our best investing days may well be behind us. I think we'll be lucky to get mid-single digit equity returns going forward, but I'm not preparing for a market collapse. Grantham has been predicting doom for so long, same advice, advising us to avoid US stocks and load up on EM value. A broken clock is correct twice a day but that is much better than Grantham's record. I believe it is prudent for those concerned about current valuations after such massive gains in the last few years to take a careful look at their portfolio and consider modestly increasing allocation to areas that clearly are not overvalued like INTL and value stocks.
Garland Whizzer
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Re: Jeremy Grantham: 70% EM value+30% cash
By sophisticated, I think he means able to walk and chew gum at the same time.nisiprius wrote: ↑Sat Jan 22, 2022 7:29 am If you have the wherewithal to become a GMO client--"Since our founding, GMO has worked with sophisticated families and their representatives to safeguard and grow wealth"
Re: Jeremy Grantham: 70% EM value+30% cash
It would be worth asking which risk is greater, the risk that Grantham is right and has a viable solution or the risk that 70% EM/30% cash is nuts.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
It is not as if these things can be assessed with great confidence and that the answers would be evident to anyone. So, a different way to put it is how likely is it that Grantham can see things that most people can't compared to the chance that Grantham is, as I say, nuts.
None of this means that bad returns can't develop across various markets at different points in time nor that inflation can't cause problems.
Re: Jeremy Grantham: 70% EM value+30% cash
Grantham is always calling for crashes.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
For example on June 17th, 2020 he stated that his firm dropped from 55% equities in March 2020 to 25% equities by the end of April 2020.
So, if you followed Jeremy's advice, you would have sold at the bottom in 2020, and have gotten to watch one of the fastest rallys in recent history, with a 25% allocation to equities.
So, why would you follow his advice now?
Perhaps, because he is know for "calling" the 2000 and 2007 bubbles. The reality is, if you call the market a bubble every few months, which he does, you are going to be right some of the time.
It is very beneficial for money managers to make bold predictions, and then get noticed when they are occasionally right, i.e. ARK being right on TSLA, but horribly wrong the last 11 months on almost everything.
Re: Jeremy Grantham: 70% EM value+30% cash
They have to be, because if they can't sell the narrative of saving you from the crash that is just around the corner, then why wouldn't you just buy a diversified index fund and get a much better return after fees.invest2bfree wrote: ↑Sat Jan 22, 2022 9:31 amevery pension fund is second guessing why they should invest in a expensive hedge fund and pay 2% on Assets/ 20% profit.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
These kind of pronouncements are for folks not to jump ship from his under performing hedge fund.
Same is true for Ray Dalio.
All these folks who manager other people's are very bearish always.
Re: Jeremy Grantham: 70% EM value+30% cash
I am not based in Europe and didn't mean this as financial advice (still don't) for anyone.Lauretta wrote: ↑Sat Jan 22, 2022 4:36 amAlright I'll check but I am not sure those funds are available here in Europe. Also I think that his philosophy is based ona barbell portfolio where you hold a lot of Bonds or cash.DanFFA wrote: ↑Sat Jan 22, 2022 4:23 amI wouldn't. I'm saying it's not a terrible idea if someone (i.e. Jeremy Grantham) wanted to focus the ex-us entirely on EM.Lauretta wrote: ↑Sat Jan 22, 2022 4:20 amSo you would avoid Europe Japan etc?DanFFA wrote: ↑Sat Jan 22, 2022 4:15 am Would be better than 100% US Stock Market or 100% US Nasdaq Index in terms of diversification.
I think a global approach likely makes more sense. Larry Swedroe fans will note that he has given the idea of 20% maximum in Emerging Markets. He also advocates for US investors underweighting the US relative to global market cap.
I think 55/45 US/EM isn't a terrible idea for one's equity allocation.
I think 30% high yield CDs is better than nothing for those that are against bonds. I'm not one of them.
Larry Swedroe's equity allocation is 50% AVUV, 25% AVDV, 25% AVEM currently the last I checked. (AVEM may have been switched out for AVES)
In the Current environment if not a good idea to hold a lot of bonds imo so I think it's better to have a greater allocation to less volatile stocks like large caps.
On bonds you can see historical returns here:
https://awealthofcommonsense.com/2022/0 ... k-to-1928/
https://awealthofcommonsense.com/2020/0 ... at-stocks/
Spoiler: During drawdowns, it never looked like a bad idea to hold some bonds.
you can look at a 60/40 variation of the Larry Swedroe portfolio for various countries here:
https://portfoliocharts.com/portfolio/portfolio-matrix/
30 US SCV, 15 Dev Ex US SCV, 15 EM, 40 Intermediate Term Treasury or Long Term Treasury (The term "Larry Swedroe Portfolio" strictly refers to the equity portion of the portfolio, and Larry diversifies across many alternative asset classes while still holding a 30% Bond allocation as he nears retirement)
and you can get some basic fund suggestion starting points here:
https://portfoliocharts.com/portfolio/fund-finder/
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Re: Jeremy Grantham: 70% EM value+30% cash
If this guy is right (doubtful, he almost never is) then that means the market and its millions of investors in the aggregate, are wrong.
Why would anybody take that bet?
This is the problem with all these stupid forecasts.
I will never veer from the market portfolio because I have no reason to think that I'm smarter than or know more than the aggregate of market participants.
This is why world market cap is, to me, the logical default equity portfolio. No bets are made in any direction.
Why would anybody take that bet?
This is the problem with all these stupid forecasts.
I will never veer from the market portfolio because I have no reason to think that I'm smarter than or know more than the aggregate of market participants.
This is why world market cap is, to me, the logical default equity portfolio. No bets are made in any direction.
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Re: Jeremy Grantham: 70% EM value+30% cash
His 'genius' move was in persuading others that he actually knew what he was talking about.
The Sensible Steward
Re: Jeremy Grantham: 70% EM value+30% cash
The crash won't happen until cbs / govts want it to. One reason they might want it to is severe spiraling inflation. 7% CPI YoY isn't that.
As far as putting 70% of a portfolio in EM value, just no. That is not reasonably diversified.
As far as putting 70% of a portfolio in EM value, just no. That is not reasonably diversified.
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Re: Jeremy Grantham: 70% EM value+30% cash
Eventually, of course, a market turn will support his assertions. For a brief moment "a cup of coffee" he will be right which likely would be of little solace to remaining holders and worse for those who have left given his AUM way down. Think I would really worry if he turned extremely bullish,
All the best
All the best
Re: Jeremy Grantham: 70% EM value+30% cash
Vanguard says emerging markets is overpriced.
See bottom of page 42:
https://institutional.vanguard.com/iam/ ... 122021.pdf
See bottom of page 42:
https://institutional.vanguard.com/iam/ ... 122021.pdf
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Re: Jeremy Grantham: 70% EM value+30% cash
True, but:Booogle wrote: ↑Sun Jan 23, 2022 5:05 am Vanguard says emerging markets is overpriced.
See bottom of page 42:
https://institutional.vanguard.com/iam/ ... 122021.pdf
"Although emerging-market equities are above our estimate of fair value, we still expect higher returns than for U.S. equities, combined with diversification benefits for investors." Page 5.
40% VT | 20% Global SCV | 20% LTPZ | 10% I-Bonds | 10% Cash
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Re: Jeremy Grantham: 70% EM value+30% cash
Rich Dad Poor Dad Robert Keosaki! there is a name from the past. He wrote how many books including with Donald Trump. I once read he did not own much real estate.Ed 2 wrote: ↑Sat Jan 22, 2022 7:41 am
We all here know what he is. I guess some needs a refresh reminders constantly because they use wrong part of the brain and doing things wrong way, wrong time. Him, Robert Keosaki, Bill Ackman and others manipulators
In addition, I suspect we see the bottom of this small dip . One’s this permabears coming it’s usually the sign for market starts recovering.
Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jeremy Grantham: 70% EM value+30% cash
So the market weight within Total International I would think should be good enough.Booogle wrote: ↑Sun Jan 23, 2022 5:05 am Vanguard says emerging markets is overpriced.
See bottom of page 42:
https://institutional.vanguard.com/iam/ ... 122021.pdf
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jeremy Grantham: 70% EM value+30% cash
It's amusing that many believe the market to be hyper efficient despite folks like Grantham still being able to attract so much capital.
The Sensible Steward
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Re: Jeremy Grantham: 70% EM value+30% cash
People are often entranced by narratives whether they be complete market efficiency in TSM or harvestable excess returns from the value factor premium. As long as the narrative rings true in one's head, it keeps playing and blocks competing inputs. We all have different heads, so there are a lot of different tunes playing at once. Each of us strongly believes in the one playing in our own head, and distrusts the ones playing in other heads. There are a lot of competing narratives to choose from but none of them is consistently reliable. That's what makes markets.willthrill 81wrote:
It's amusing that many believe the market to be hyper efficient despite folks like Grantham still being able to attract so much capital.
Garland Whizzer
Re: Jeremy Grantham: 70% EM value+30% cash
This is only one book I would recommend to read for everyone. After that I guess he turned to the dark side. His everyday crazy tweets is something that is not coming from adequate person , I’d say politely))abuss368 wrote: ↑Sun Jan 23, 2022 11:32 amRich Dad Poor Dad Robert Keosaki! there is a name from the past. He wrote how many books including with Donald Trump. I once read he did not own much real estate.Ed 2 wrote: ↑Sat Jan 22, 2022 7:41 am
We all here know what he is. I guess some needs a refresh reminders constantly because they use wrong part of the brain and doing things wrong way, wrong time. Him, Robert Keosaki, Bill Ackman and others manipulators
In addition, I suspect we see the bottom of this small dip . One’s this permabears coming it’s usually the sign for market starts recovering.
Best.
Tony
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: Jeremy Grantham: 70% EM value+30% cash
Interesting and I did not know that. I recall. 20 years or so ago he was very popular and Rich Dad Poor Dad was everywhere.Ed 2 wrote: ↑Sun Jan 23, 2022 12:25 pmThis is only one book I would recommend to read for everyone. After that I guess he turned to the dark side. His everyday crazy tweets is something that is not coming from adequate person , I’d say politely))abuss368 wrote: ↑Sun Jan 23, 2022 11:32 amRich Dad Poor Dad Robert Keosaki! there is a name from the past. He wrote how many books including with Donald Trump. I once read he did not own much real estate.Ed 2 wrote: ↑Sat Jan 22, 2022 7:41 am
We all here know what he is. I guess some needs a refresh reminders constantly because they use wrong part of the brain and doing things wrong way, wrong time. Him, Robert Keosaki, Bill Ackman and others manipulators
In addition, I suspect we see the bottom of this small dip . One’s this permabears coming it’s usually the sign for market starts recovering.
Best.
Tony
Thanks.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Re: Jeremy Grantham: 70% EM value+30% cash
therealkiyosaki, on twitter.abuss368 wrote: ↑Sun Jan 23, 2022 12:55 pmInteresting and I did not know that. I recall. 20 years or so ago he was very popular and Rich Dad Poor Dad was everywhere.Ed 2 wrote: ↑Sun Jan 23, 2022 12:25 pmThis is only one book I would recommend to read for everyone. After that I guess he turned to the dark side. His everyday crazy tweets is something that is not coming from adequate person , I’d say politely))abuss368 wrote: ↑Sun Jan 23, 2022 11:32 amRich Dad Poor Dad Robert Keosaki! there is a name from the past. He wrote how many books including with Donald Trump. I once read he did not own much real estate.Ed 2 wrote: ↑Sat Jan 22, 2022 7:41 am
We all here know what he is. I guess some needs a refresh reminders constantly because they use wrong part of the brain and doing things wrong way, wrong time. Him, Robert Keosaki, Bill Ackman and others manipulators
In addition, I suspect we see the bottom of this small dip . One’s this permabears coming it’s usually the sign for market starts recovering.
Best.
Tony
Thanks.
Tony
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"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: Jeremy Grantham: 70% EM value+30% cash
even a stopped clock will be right twice a day but i wouldn't rely on it to tell me the time.Lauretta wrote: ↑Sat Jan 22, 2022 3:54 am Jeremy Grantham speaks about bubble in most asset classes including us stocks bonds real estate and most commodities and when asked where to invest I suggest 70% em value based on the largest valuation spread historically and keep a lot of cash for when there will be a market decline which for him is inevitable because the other option would be for the market to go sideways for 10 15 years which historically has not happened since usually booms are followed by busts.
What do you think of his portfolio? anyone following a similar strategy?
PS I read an article about this in my own language but his interviews in English can easily be found on YouTube
love the part about keeping a lot of cash...so how much cash? how long has that cash been on the sidelines not earning any money. and so on.
market timing pure and simple.
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Re: Jeremy Grantham: 70% EM value+30% cash
You can attract anybody using either fear or greed. In the investment business, it's the equivalent of what "sex sells" is in the entertainment business.willthrill81 wrote: ↑Sun Jan 23, 2022 11:39 am It's amusing that many believe the market to be hyper efficient despite folks like Grantham still being able to attract so much capital.
CyclingDuo
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Re: Jeremy Grantham: 70% EM value+30% cash
He writes and goes on TV, I feel, to explicitly to try and reduce the bleeding of his investment products. in the past 8-10 years he's basically lost 50% of all assets invested in his products.
Re: Jeremy Grantham: 70% EM value+30% cash
One thing is that you can't blame GMO for not putting their money (or their investors money) where their mouth is. They do this through the GMO Benchmark Free Allocation fund (GBMFX), and the GMO Implementation fund (GIMFX). Both managed by lead manager Ben Inker who is close to the thinking of Grantham for over 18 years in case of first one and since 2013 inception in case of second one. The first fund allocates 90% to the second fund, so they are proxies for each other. Here is the fund strategy according to the prospectus:
The Fund seeks annualized returns of 5% (net of fees) above the Consumer Price Index and annualized volatility (standard deviation) of
5-10%, each over a complete market cycle. GMO does not manage the Fund to, or control the Fund’s risk relative to, any securities index or
securities benchmark.
GMO seeks to achieve the Fund’s investment objective by investing the Fund’s assets in asset classes GMO believes offer the most
attractive return and risk opportunities. GMO uses its quantitative multi-year forecasts of returns among asset classes, together with its
assessment of the relative risks of such asset classes, to determine the asset classes in which the Fund invests and how much the Fund invests in each asset class. An important component of those forecasts is GMO’s expectation that valuations ultimately revert to their fundamental fair (or intrinsic) value. GMO changes the Fund’s holdings of particular asset classes in response to changes in GMO’s investment outlook and its assessment of market valuations and may use redemptions or purchases of Fund shares to rebalance the Fund’s investments. The factors GMO considers and investment methods GMO uses can change over time.
The Fund is structured as a fund of funds and gains its investment exposures primarily by investing in Implementation Fund. In addition,
the Fund may invest in any other GMO Fund (together with Implementation Fund, the “underlying GMO Funds”), whether now existing or
created in the future. These underlying GMO Funds may include, among others, Opportunistic Income Fund, Emerging Country Debt Fund,
High Yield Fund, and the Alternative Funds (see “Additional Information About the Funds’ Investment Strategies, Risks, and
Expenses — Asset Allocation Funds”). Implementation Fund is permitted to invest in any asset class and may utilize an event-driven strategy, such as merger arbitrage. The Fund also may invest directly in securities (including underlying funds) and derivatives.
link to prospectus
Okay, so yes, true to their word they invest based on their forecasts. This allows us to inspect the success (or failure) of that strategy in real time. GMBFX has an ER of 0.96%. It is invested 47% Non-US (mainly EM), and only 6% US Equities, 20% in Fixed income, and 26% in Cash. It has a P/B of 1.07 indicating a value tilt. Morningstar places it in the Large Value box.
So the stated objective is to earn 5% above CPI, with volatility in the 5%-10% range. How well did they meet this strategy over the past 9 and 18 years? We can see this result here, and here.
As shown, both funds managed to earn about 3% plus with volatility in the 7%-8% range. Longer time frame for GBMFX shows about 6% plus, still falling short of stated objective. They met the objective of keeping the volatility in the expected range, while falling grossly short of the return objective of 5% above CPI, which averaged about 2.5% in this timeframe, so instead of earning about 7.5% annualized with about similar volatility, they grossly underperformed in meeting return objective.
Naturally, Grantham and company are upset with the market for thwarting their plans over the past decade or so. One wonders though wouldn't reasonable people change their mind when something they have tried hasn't worked for this many years, and it starts feeling like they are in a Quixotic pursuit of tilting against the windmill. All that said, the strategy may be up this year, this could be the year finally it starts paying fruits. Is it worth it? A simple Balanced Index fund comparison shows that it met the stated objective of GMO funds ironically, all it needed was a much simpler know nothing approach and rock bottom expenses. Again, doubters will say these simple approaches will fall short and point to 2000-09 decade, but it's worth noting the GMO fund was in existence since 2004 and still hasn't managed to set things ablaze since 2010. They did manage well up until 2009, but was blown away since then, again blame the Fed as they had different ideas to fight recessions than GMO. Bottomline, this is the risk with all market timing efforts, including the ones based on valuations models, they just fall short time and again, failing to meet our objectives. These strategies are simply not reliable and have worse odds than a know nothing approach following an AA plan based on our goals.
The Fund seeks annualized returns of 5% (net of fees) above the Consumer Price Index and annualized volatility (standard deviation) of
5-10%, each over a complete market cycle. GMO does not manage the Fund to, or control the Fund’s risk relative to, any securities index or
securities benchmark.
GMO seeks to achieve the Fund’s investment objective by investing the Fund’s assets in asset classes GMO believes offer the most
attractive return and risk opportunities. GMO uses its quantitative multi-year forecasts of returns among asset classes, together with its
assessment of the relative risks of such asset classes, to determine the asset classes in which the Fund invests and how much the Fund invests in each asset class. An important component of those forecasts is GMO’s expectation that valuations ultimately revert to their fundamental fair (or intrinsic) value. GMO changes the Fund’s holdings of particular asset classes in response to changes in GMO’s investment outlook and its assessment of market valuations and may use redemptions or purchases of Fund shares to rebalance the Fund’s investments. The factors GMO considers and investment methods GMO uses can change over time.
The Fund is structured as a fund of funds and gains its investment exposures primarily by investing in Implementation Fund. In addition,
the Fund may invest in any other GMO Fund (together with Implementation Fund, the “underlying GMO Funds”), whether now existing or
created in the future. These underlying GMO Funds may include, among others, Opportunistic Income Fund, Emerging Country Debt Fund,
High Yield Fund, and the Alternative Funds (see “Additional Information About the Funds’ Investment Strategies, Risks, and
Expenses — Asset Allocation Funds”). Implementation Fund is permitted to invest in any asset class and may utilize an event-driven strategy, such as merger arbitrage. The Fund also may invest directly in securities (including underlying funds) and derivatives.
link to prospectus
Okay, so yes, true to their word they invest based on their forecasts. This allows us to inspect the success (or failure) of that strategy in real time. GMBFX has an ER of 0.96%. It is invested 47% Non-US (mainly EM), and only 6% US Equities, 20% in Fixed income, and 26% in Cash. It has a P/B of 1.07 indicating a value tilt. Morningstar places it in the Large Value box.
So the stated objective is to earn 5% above CPI, with volatility in the 5%-10% range. How well did they meet this strategy over the past 9 and 18 years? We can see this result here, and here.
As shown, both funds managed to earn about 3% plus with volatility in the 7%-8% range. Longer time frame for GBMFX shows about 6% plus, still falling short of stated objective. They met the objective of keeping the volatility in the expected range, while falling grossly short of the return objective of 5% above CPI, which averaged about 2.5% in this timeframe, so instead of earning about 7.5% annualized with about similar volatility, they grossly underperformed in meeting return objective.
Naturally, Grantham and company are upset with the market for thwarting their plans over the past decade or so. One wonders though wouldn't reasonable people change their mind when something they have tried hasn't worked for this many years, and it starts feeling like they are in a Quixotic pursuit of tilting against the windmill. All that said, the strategy may be up this year, this could be the year finally it starts paying fruits. Is it worth it? A simple Balanced Index fund comparison shows that it met the stated objective of GMO funds ironically, all it needed was a much simpler know nothing approach and rock bottom expenses. Again, doubters will say these simple approaches will fall short and point to 2000-09 decade, but it's worth noting the GMO fund was in existence since 2004 and still hasn't managed to set things ablaze since 2010. They did manage well up until 2009, but was blown away since then, again blame the Fed as they had different ideas to fight recessions than GMO. Bottomline, this is the risk with all market timing efforts, including the ones based on valuations models, they just fall short time and again, failing to meet our objectives. These strategies are simply not reliable and have worse odds than a know nothing approach following an AA plan based on our goals.
Re: Jeremy Grantham: 70% EM value+30% cash
.....
Last edited by jh on Wed Apr 27, 2022 11:05 pm, edited 1 time in total.
Retired in 2022 at the age of 46. Living off of dividends.
Re: Jeremy Grantham: 70% EM value+30% cash
maybe someday he'll be right
Don’t let anyone else ruin your portfolio. It’s your portfolio. Ruin it yourself!!!