Jeremy Grantham has come out with his latest newsletter, and most devotees have by now probably parsed the document and have drunk their fill from the well. As always, Grantham mixes his grumpy humor with enough facts to tickle the engaged mind. He's also done us the service of highlighting and underlining his key points. I for one find it engaging enough to read without skimming.
The message is largely the same. S&P fair value he still labels around 860, Greenspan is still someone favorably compared to Mephisto, and he is still cursed with being a value investor, and has again cursed himself roundly for missing the recent 'junk' rally.
A 'cursory' glance at the performance of the various GMO funds would substantiate his self-deprecation - only the fixed-income category soundly beat benchmarks, and US equity-based funds performed very poorly relatively. It does seem he largely missed the rally in the US. A saving grace of course is that he largely missed the decline last year as well (a 10% overall decline I believe)- the 'curse' does work both ways.
I *still* do not know what he deems to be 'quality' US stocks, outside of his general description regarding dividends, low debt, and high, stable returns. I should know by now that he is simply not going to issue a list.
Some money quotes:
"The lessons, if any, are that low rates and generous liquidity are, if anything, a little more powerful than we thought, which is a high hurdle because we have respected their power for years."
A couple final thoughts:
1) Grantham has had an uncanny ability to actually predict market directions with a high degree of accuracy with respect to both timing and severity, so I place a premium upon his pronouncements, much more than most other punters or speculators.
2) I highly recommend that if you have not read it yet, to go to his website and read the full article (sans the parts on endowment and redesigning the financial system - also, try not to be turned off by his introductory 2-page rant - I promise it gets better). Registration is free: