T. Myers

Jeremy Grantham on 'The Curse of the Value Manager'

Comon guys, please note the phrase "strong value bias". Grantham is not necessarily looking at the slope of the change in earnings, the RSI or momentum. Value bias generally means that he will be buying for sustainable earnings, or earnings power, for the strength of the business model and for the competitive advantages the company has developed. This theory is almost entirely contrary to momentum of any sort. Even if Mr. Grantham is even a few years ahead of schedule, he has surely explained that he is creating value for the long term. By the rule of 72 and the record for the best value investors he should be doubling his money roughly every 5 years or 14.5% pa. Please look at his record and his methods. And as for the S&P at 700, he will not be buying the S&P 500 or Spyders - that is the broader market and its not what he is paid to do.

Then there is cash. A wonderful asset. Unfortunately, in the US it is losing its value at around 8.5% annually as per Shadow Govt Stat's read on the pre-Clinton CPI. In the long run, strong brands with pricing power are the best way to retain and create value.