Jeremy Grantham: ‘No market for young men’

Kenster1_GlobalValue

http://www.marketwatch.com/Story/story/print?guid=3E535790-DFDD-11E0-A65A-00212803FAD6

By Jonathan Burton, MarketWatch

SAN FRANCISCO (MarketWatch) — Hey, Young Turks on trading desks, up-and-coming money managers and Wall Street stock jockeys: You want the truth about the global markets today?

Listen to Jeremy Grantham, chairman of Boston-based investment manager GMO LLC: You can’t handle the truth.

“This is no market for young men,” Grantham said. “At least us old men remember what a real bear market is like, and the young men haven’t got a clue.”

Women, too, for that matter. And at 72, after 40-plus years in the investment business, Grantham can make this claim unchallenged, but his point is more about the lessons of experience than the limitations of age, and an investor’s ability to build on the former and overcome the latter.

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The potential for gains is “modestly higher” outside of the U.S., he added, other than “high-quality blue-chips.” Mostly, he said he prefers discounted plays that are surfacing in Europe and emerging markets.

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At the same time, he’s not jumping on the long-term-bond bandwagon. “One day we will have more inflation and our bonds will bleed like a pig,” Grantham said. “The only reason for buying long bonds is short-term or as a desperate haven for terrorized investors. But the potential to make longer-term real money is naught.”

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For others, Grantham advised taking a page from GMO and buying shares in companies with strong finances and which produce goods that people need, as opposed to luxury items. Look for dividend-paying opportunities in emerging markets especially. “I would own emerging and EAFE (the MSCI Europe, Australasia, and Far East Index), including Japan,” Grantham said.

scott

I find myself agreeing with Grantham more and more. "...and which produce goods that people need.." has largely become my long-term view (real/strategic/hard assets, needs), not getting things that are faddish. I'm certainly in agreement with the resource limitations he discussed in his Q1 letter:

http://www.gmo.com/websitecontent/JGLetter_ResourceLimitations2_2Q11.pdf