Backgrounds

This page is not about the blog author. It is a place to put background information on people, organizations, frameworks, and ideas. Instead of putting background information into posts, I can reference this page and save space in the post.

GMO
http://www.gmo.com [Current content on main page; archives require free registration]
GMO is a Boston based institutional money manager with assets under management of about $110B (Sept. 2013). They are “value” investors. In my opinion they produce excellent, sophisticated analysis on markets and the economy. Their people are top notch. They publish clearly written and clearly reasoned pieces that are often eclectic yet very much on point and pragmatic.

One of their central tenants is “mean reversion” – the notion, based on historical analysis and economic reasoning – that things like corporate profit margins and stock market valuations hover around a fairly predictable trend line. Simple as the notion is, there is plenty of nuance and they constantly challenge their own notions.

Co-founder Jeremy Grantham is perhaps the best known even though he is typically recalcitrant with the media. Grantham has written extensively on long-run issues related to commodities and resources. He is also an outspoken advocate for action on climate change. He is in profound disagreement with the Greenspan-Bernanke regime.

The quarterly newsletter is now in two parts. Grantham no longer addresses the bread and butter market valuation part. Ben Inker writes that. Grantham writes on whatever he fancies, but it is always relevant to long term investors.

Perhaps the two most important things that GMO does on an ongoing basis are their 7-year asset class return forecasts and their study of bubbles. The former are total return forecasts for several types of assets (e.g. U.S. stocks, Emerging Market equities, bonds). The latter includes research into asset bubbles across all geographies and time.

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