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James Montier - Published 5/14/2012
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James Montier, a member of GMO's Asset Allocation Team, presents a white paper in which he tackles some of the problems with financial models and offers a 'Manifesto for Change" as we rethink finance.
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Richard Mattione - Published 5/3/2012
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The markets remain too sanguine about the valuations of banks in the face of macroeconomic adjustment, deleveraging, and the various capital, leverage, and liquidity rules that will come from round three of the Bank for International Settlements (BIS). That should translate into returns on equity that are likely to be sharply reduced in the future. This white paper shows how valuation is affected for a variety of factors including capital structure and leverage, and then applies those scenarios to the banks of various nations in the developed world. That translates into price to equity ratios that range from the slightly cheap to the oft-mentioned “fully valued,” which itself usually substitutes for "too high," even though price to book ratios appear to be at a substantial discount.
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James Montier - Published 3/20/2012
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In this white paper, James Montier, a member of GMO's Asset Allocation team, looks at the macro drivers of profit margins, assessing whether today's record margins, especially in the US, are due for a fall to more reasonable levels.
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Amit Bhartia and Matt Seto - Published 1/19/2012
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In this Emerging Thoughts piece, Amit Bhartia and Matt Seto make the case that emerging market countries play a significant role in how gold is being priced today and how it will be priced in the future.
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Arjun Divecha - Published 1/5/2012
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As a complement to his article published in the FT on Jan. 4, Arjun Divecha fleshes out more fully his argument that buying emerging small cap stocks or large multinationals is not the best way to tap into domestic demand in emerging markets.
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Richard Mattione - Published 12/12/2011
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In this white paper, Rich Mattione continues his earlier study (Et tu, Berlusconi?) on the sovereign debt crisis, with a particular focus on the capital strength of banks in Europe.
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David Cowan and Sam Wilderman - Published 11/17/2011
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Convex and concave payoffs play a central role in the performance of many investment strategies. In considering a range of applications, including high and low beta stocks, options, levered ETFs, and hedge funds, the authors show how understanding these payoffs can have important consequences for understanding asset pricing and making investment decisions.
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Richard Mattione - Published 10/27/2011
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In this white paper, Rich Mattione constructs a simple model that attempts to arithmetize the dynamics of sovereign debt and then applies several hypothetical scenarios specific to the European sovereign debt problem, concluding that the arithmetic of Europe's sovereign debt crisis is daunting, but not insuperable.
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Edward Chancellor - Published 9/15/2011
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US housing has been through a prolonged slump, while China’s real estate market has been booming. Many people believe these trends will continue for a while. In fact, property is the most cyclical of assets. After five years of decline, the US real estate cycle may well be approaching a trough. Across the Pacific Ocean, however, it looks like time is running out for China’s overheated property market.
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James Montier - Published 6/27/2011
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In this white paper, James Montier, a member of GMO's Asset Allocation team, examines tail risk protection and how many of the principles of disciplined value investing can be helpful in first identifying tail risk and then choosing the best insurance to protect against it.
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Edward Chancellor - Published 4/8/2011
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In this white paper, Edward Chancellor, a member of GMO's Asset Allocation team, explores the question as to whether Japan will provide yet another decade of disappointing results to investors given not only the recent natural disaster there, but also in light of the historical perceptions (and misperceptions) commonly held about this important market. His focus is on demographics, deficits, deflation, and corporate decline.
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Rich Mattione and Toby Rodes - Published 3/17/2011
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Rich Mattione and Toby Rodes, portfolio managers for GMO's International Active Division's Japan investments, provide an in-depth look at how companies and industries may be affected by the earthquake and tsunami in the Tohoku region of Japan.
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James Montier - Published 3/8/2011
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In a follow-up to his last paper, James Montier, a member of GMO's Asset Allocation team, shares what he believes to be the key principles to sound investment. (Please note that on March 10 the data for Exhibit 6 was updated through February 2011.)
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Arjun Divecha - Published 1/11/2011
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In this short piece, Arjun Divecha, Director of GMO's Emerging Markets Division, shares some of his thoughts on China and India.
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James Montier - Published 12/22/2010
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James Montier's latest paper discusses his belief that mean reversion is far from dead when it comes to the principles of sound investing.
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Tina Vandersteel - Published 12/18/2010
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GMO's Fixed Income group tackles the question of under what circumstances inflation-protected bonds - domestic, global, emerging country - make good investments. The answer may surprise you: even if you think inflation is going up, TIPS might not be the right choice.
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Ben Inker - Published 11/8/2010
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In this white paper, Ben Inker, Director of Asset Allocation at GMO, offers six basic questions investors might ask in their efforts to form reasonable conclusions about those asset classes and strategies that fit best with their investment objectives, and what kind of long-term returns might be expected from them.
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James Montier - Published 8/24/2010
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In this white paper, James Montier, a member of GMO's Asset Allocation team, discusses the importance of dividends historically and in today's investment environment.
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Edward Chancellor - Published 7/8/2010
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In this white paper, Edward Chancellor, a member of GMO's Asset Allocation team, provides his thoughts on sovereign debt. Specific questions he addresses in the paper include: Why in the past have governments defaulted on their debts? When have deeply indebted countries kept faith with their creditors? Under what conditions do governments opt for inflation rather than default?
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