GMO Required Reading

Irrational Exuberance in the U.S. Equity Market

Jeremy Grantham | April 2000

In the GMO 1Q 2000 Letter, Jeremy Grantham recounts the events of the prior quarter. In the first quarter, the U.S. equity market continued down the path it had been going. Technology stocks completely dominated all other sectors of the market, with euphoria spreading to smaller, more speculative issues and reaching levels probably never seen before.

Read the paper.


 

It's Everywhere, In Everything: The First Truly Global Bubble

Jeremy Grantham | April 2007

Jeremy Grantham's 1Q 2007 letter to clients discusses the necessary conditions for a market bubble, and why it's difficult to pinpoint when the bubble will burst or the particular catalyst for the burst. Letters to the Investment Committee XI extends last quarter's discussion ("Let's All Look Like Yale") in "Yale Meets Goldilocks," with a focus on the effects of the trend to diversify away from traditional investments and into non-traditional asset categories.

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When Diversification Failed

Ben Inker | December 2008

In this paper written as the GFC was roiling markets, Ben Inker outlines why we at GMO believe investors need to reassess the virtues of diversification among risk assets.

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Reinvesting When Terrified

Jeremy Grantham | March 2009

In the depths of the Global Financial Crisis, Jeremy Grantham advises investors how to avoid terminal paralysis and reinvest, by creating and then sticking to battle plans.

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I Want to Break Free

James Montier | May 2010

In this paper, James Montier makes the case that policy portfolios are flawed from an investment perspective, with two common failings being a mis-measurement of risk and an indifference to valuation.

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Back to Basics: 6 Questions to Consider Before Investing

Ben Inker | November 2010

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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The Seven Immutable Laws of Investing

James Montier | March 2011

James Montier shares what he believes to be the key principles to sound investment.

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My Sister's Pension Assets and Agency Problems

Jeremy Grantham | April 2012

The central truth of the investment business is that investment behavior is driven by career risk. In the professional investment business we are all agents, managing other peoples’ money. Professional investors pay ruthless attention to what other investors in general are doing. The great majority “go with the flow,” either completely or partially. This creates herding, or momentum, which drives prices far above or far below fair price. There are many other inefficiencies in market pricing, but this is by far the largest.

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The What-Why-When-How Guide to Owning Emerging Country Debt

Tina Vandersteel | May 2012

In this white paper, GMO’s Emerging Country Debt team presents the case for owning emerging debt. Originally produced in 2012, this 2017 edition includes current facts, updated figures, and more FAQ answered as compared to the original.

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Profits for the Long Run: Affirming the case for Quality

Kim Mayer | June 2012

In this 2012 white paper, the Quality Strategy team discusses the way in which a fundamental focus on profitability remains the best way to minimize the true risk with which investors should be concerned.

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Contemplating Value in Emerging Markets Intelligently, with a Little Help from Ben Graham

Amit Bhartia | February 2018

In this Emerging Equity Insights piece, we revisit Ben Graham’s principles of value investing and extrapolate them further to the implications of investing in emerging markets. Graham reminds us that a disciplined approach to good investing requires us to be cognizant of changes in intrinsic value and be open to re-examining previously established conclusions. This holds true particularly in emerging markets where multiple risks abound and an economically diversified portfolio is critical to tackle uncertain outcomes.

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Waiting for the Last Dance

Jeremy Grantham | January 2021

The long bull market since 2009 has matured into an epic bubble, featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior.

Read the paper.