for over 40 years
In his latest Viewpoints piece, Jeremy Grantham warns that the market is now checking off all the touchy-feely characteristics of a major bubble. Given his experience as a historian of markets, we would be wise to listen.
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After more than a decade of disappointing performance, Value stocks just experienced their worst 12-month performance in history. This has left these stocks trading at some of the cheapest levels relative to the market we have ever seen.
Value is extraordinarily cheap today, and we believe expensive Growth stocks are in a bubble similar the TMT bubble in 2000. We recently launched the Equity Dislocation Strategy to profit from this opportunity by intelligently being long undervalued stocks and short overvalued stocks globally.
Jeremy Grantham spoke with CNBC’s Closing Bell about the need for a new “green” Marshall Plan in the U.S. to combat climate change and accelerate economic growth. He also believes the stock market is in a bubble, and he sees opportunities in emerging markets and Value equities.
GMO has offered a broad range of innovative fixed income capabilities since the early 1990s. Our Developed Rates & FX team currently manages the Fixed Income Absolute Return Strategy, a robust, systematic absolute return strategy focused on relative value investments in global rates and currencies. Alpha is harvested from cross-sectional markets using independent – and lowly correlated – models for country duration and FX risk exposure.
Resource equities look historically attractive, currently trading at around an 80% discount to the equity market. With global equity markets offering below average expected returns and inflation potentially on its way, we think resource equities provide important diversification and inflation protection for investors today.