Jeremy Grantham is somewhat of a legend in value circles. He is the rarest of investors – one who knows what he doesn’t know. It is this self awareness combined with a methodical investment framework and process that has been honed over many years of experience that makes GMO’s quarterly letters a must read for any serious value-oriented investor.
In January 2017’s missive (Q42016), Grantham’s portion of the letter takes aim at something IOI has written passionately about to start the year, the long standing factors that lead to the election of our current administration. Grantham’s theme of “protection from the rich and powerful” is an echo of IOI’s own socio-economic themes that we believe have led to the current political environment, which is shaping up to be an interesting one at least. This thoughtful piece is worth your reading time by itself.
Ben Inker, who is now essentially CIO at GMO, provides the firm’s strategic portfolio repositionings in the front section. The way we read this is that Mr. Inker takes the broad themes from Grantham’s macro level thinking here and then seeks to apply a prudent, risk adjusted return approach to making investments.
Your challenge, dear reader, is to see if you can effectively make the links from the investment strategy insights to the tactical portfolio allocation impacts summarized in Inker’s last paragraph. GMO’s is at least one approach at top down value investing. They are looking for areas where value is more likely to be present and allocating assets accordingly against a long term investment horizon.
Questions or thoughts to share on this? Use the contact us form below to send them along. We’d love the opportunity to think about it all with you.
In the meantime, Invest Intelligently!