Jeremy Grantham Quotes
111 Jeremy Grantham Quotes
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[In March 2006.] People have not been saving, under the delusion that they are rich because of paper profits. The savings rate in the past ten years has averaged 3%. It used to be 8%. That's a five-point gap for ten years. That's 50% of a year's salary that should have been compounding over the past ten years that simply does not exist and will never be replaced. So the retirees are, in a nutshell, screwed.
Jeremy Grantham
[In March 2007.] When the next crack occurs, we don't know how brutal and quick it will be, and people who think they'll be able to gracefully cycle out may easily have an unpleasant surprise.
Jeremy Grantham
[In March 2007.] It may turn out that you can avoid the next crisis only by being positioned ahead of time.
Jeremy Grantham
[In August 2007.] It's been a while since anything has been cheap. Right now I would say that 10-year government bonds and TIPS [Treasury Inflation-Protected Securities] are good.
Jeremy Grantham
[In August 2007.] The economy is like the Golden Gate Bridge. You've got a series of bolts that are very sensitive and rather flaky and one or two look like they're failing. It doesn't mean the bridge is going to come down. You hope that two or three of them are not lined up together. I think in the end it's going to be several of these pieces that fail.
Jeremy Grantham
[In August 2007.] We are taking as little risk as we have ever taken in our 30-year history and clutching more cash and bonds than we normally hold… For example, in an account for which I have total discretion and no constraints, I have 17% in emerging-markets stocks and a 17% short position in the Russell 2000 index (U.S. small cap stocks). That nets out to zero equity exposure. The rest of the money is in cash and a bit of timber.
Jeremy Grantham
[In February 2008.] The economy is driven by education, man-hours worked, capital investment and technology. It is not driven by what I owe you and you owe me.
Jeremy Grantham
[In February 2008 on the GFC.] This is much more global than, say, the savings-and-loan crisis was. The world is obviously much more globalized than at any time since the late 19th century and much more interrelated in almost every way, certainly financially. To have the leading economy and the reserve currency having a major-league credit crisis would by itself make it more important than earlier ones.
Jeremy Grantham
[In February 2008.] People think the Federal Reserve can stop a bear market because they can throw money at it and lower interest rates. It is even more certain we can collectively stop a bear market if some fiscal stimulus is thrown in. To which I say, 'Oh, you mean like 2000 and 2002?'-when they threw what I call the greatest stimulus in American history, an unparalleled series of interest-rate cuts, cumulating in two, almost three, years of negative real returns, real interest rates coupled with a really substantial tax cut… The combination would have gotten the dead to walk, and it stopped the bear market eventually. But the Standard & Poor's 500 was down 50% and the Nasdaq-which was all anyone talked about back then-went down 78%.
Jeremy Grantham
[In February 2008.] It was late in '06 when [Fed Chairman Benjamin] Bernanke said he thought the high prices of homes in the U.S. merely reflected a strong U.S. economy. Was he not looking at the data? Did he not measure longterm house prices?
Jeremy Grantham
[In February 2008.] I have yet to meet a private-equity firm that put into its spreadsheet the assumption that system-wide profit margins could decline by 20% to 30%. They have taken the current, abnormally high profit margins as a given and then determined to improve them by, let's say, 15% and assume everything works out pretty well.
Jeremy Grantham
[In February 2008.] But if the base declines by 20%, even if they end up improving margins by 15%, they are going backwards.
Jeremy Grantham
[In October 2008.] Previous bubbles have always overcorrected.
Jeremy Grantham
[In October 2008.] Catching a falling knife is never without pain, [but] the prime directive is to buy cheap assets.
Jeremy Grantham
[In October 2008.] Great bubbles like the one in 2000 take a long time to wash through the system, and you shouldn't really expect a low much before 2010.
Jeremy Grantham
[In October 2008.] The great trap is to buy too soon and, in the big move, to sell too soon. I've been saying since '98-'99 that my next major-league error will be buying too soon - but we will not buy quite yet. But when we do, I suspect it will be too soon again.
Jeremy Grantham
[In November 2008.] U.S. pension funds are crying in their soup now, but they can at least find some solace in the fact that, for the first time in 20 years, we're looking at all global equities being modestly cheap. Some are substantially cheap.
Jeremy Grantham
[In November 2008.] All you had to do was open a history book and see what happens when you have a bubble. In this case, there was a bubble in housing and there was a magnificent bubble in risk taking. People were just shoveling their money into risk on the pathetic idea that risk is always rewarded. That is completely misguided. You don't get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.
Jeremy Grantham
[In November 2008.] Leverage is the ultimate demonstration of risk… We had several firms that were leveraged 30 to 1. [For every $30 of assets on their books, they put up $1 of equity and borrowed the other $29.] At leverage of 30 to 1, you have to lose only about 3% on your $30 worth of assets and your dollar of equity gets wiped out. You're bankrupt.
Jeremy Grantham
[In November 2008.] One of the lessons I have learned over the years is that things can get a whole lot more extreme, both up and down, than you ever dreamed of.
Jeremy Grantham
[In November 2008.] People lost the knack of thinking that cheaper assets are better. We're going to return to that way of thinking…
Jeremy Grantham
[In November 2008.] Most of the private equity returns turned out to be just simple, crude leverage, at the client's risk. The typical hedge fund made money by picking up nickels in front of a steam roller, and a lot of them are flattened to prove it.
Jeremy Grantham
[In May 2011.] We often arrive at the winning post with good long-term results... but not necessarily with the same clients that we started out with.
Jeremy Grantham
[In February 2012.] Believe in history. In investing Santanyana is right: history repeats and repeats, and forget it at your peril.
Jeremy Grantham
[In February 2012.] All bubbles break, all investment frenzies pass away. You absolutely must ignore the vested interests of the industry and the inevitable cheerleaders who will assure you that this time it’s a new high plateau or a permanently higher level of productivity…
Jeremy Grantham
[In February 2012.] The market is gloriously inefficient and wanders far from fair price but eventually, after breaking your heart and your patience (and, for professionals, those of their clients too), it will go back to fair value.
Jeremy Grantham
[In February 2012.] If you borrow to invest, it will interfere with your survivability. Unleveraged portfolios cannot be stopped out, leveraged portfolios can.
Jeremy Grantham
[In February 2012.] Don’t put all of your treasure in one boat… It was learned by merchants literally thousands of years ago.
Jeremy Grantham
[In February 2012.] Wait for the good cards. If you’ve waited and waited some more until finally a very cheap market appears, this will be your margin of safety. Now all you have to do is withstand the pain as the very good investment becomes exceptional.
Jeremy Grantham
[In February 2012.] Individual stocks usually recover, entire markets always do.
Jeremy Grantham
[In February 2012.] The… curse of professional investing is over-management caused by the need to be seen to be busy, to be earning your keep. The individual is far better-positioned to wait patiently for the right pitch while paying no regard to what others are doing, which is almost impossible for professionals.
Jeremy Grantham
[In February 2012.] Optimism has probably been a positive survival characteristic… and successful people are probably more optimistic than average… But optimism comes with a downside, especially for investors: optimists don’t like to hear bad news.
Jeremy Grantham
[In February 2012.] It is easier for an individual to stay cool than it is for a professional who is surrounded by hot news all day long.
Jeremy Grantham
[In February 2012.] Resist the crowd: cherish numbers only.
Jeremy Grantham
[In February 2012.] Remember… those great opportunities to avoid pain or make money – the only investment opportunities that really matter – the numbers are almost shockingly obvious: compared to a long-term average of 15 times earnings, the 1929 market peaked at 21 times, but the 2000 S&P 500 tech bubble peaked at 35 times! Conversely, the low in 1982 was under 8 times. This is not about complicated math!
Jeremy Grantham
[In February 2012.] To be at all effective investing as an individual, it is utterly imperative that you know your limitations as well as your strengths and weaknesses. If you can be patient and ignore the crowd, you will likely win. But to imagine you can, and to then adopt a flawed approach that allows you to be seduced or intimidated by the crowd into jumping in late or getting out early is to guarantee a pure disaster.
Jeremy Grantham
[In February 2012.] Keep it simple when you can.
Jeremy Grantham
[In February 2012.] You can push stocks up to get a wealth effect, but we live in a mean-reverting world, and they come back down again when you least need it. It's a pact with the devil.
Jeremy Grantham
[In February 2012.] Every investment firm has great expertise. Ours is the recognition and understanding of the great asset class bubbles. That's why we got 2000 and 2007 so right. We had huge confidence, and were able to stand against the crowd. We said ‘It's the end of the world, abandon ship,’ and everyone was just, you know, enjoying the sunshine.
Jeremy Grantham
[In February 2012.] We like to see horrific roller coasters: It gives us something to get our teeth into.
Jeremy Grantham
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