Jeremy Grantham Quotes
111 Jeremy Grantham Quotes
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[In July 2012.] How did the price/earnings ratio of the S&P 500 get to 35 in 2000, compared with the long-run average of 15? You had a massively mispriced market, and it was talked about all over the place. But no one would step aside. Institutions couldn't bring themselves to do that because they would have been skinned alive for their conservatism… Playing against the tech bubble was unbelievably painful for us for two years, and then eventually, of course, it paid off handsomely.
Jeremy Grantham
[In July 2012.] At GMO, we have a database of 35 bubbles. Of the 33 that have ended, every one broke all the way back - not halfway back - to the trend before the bubble started.
Jeremy Grantham
[In July 2012.] Stocks are kind enough to wear a price tag. In 2000 the price tag said ‘Ouch!’ It implied a return of negative 3% a year for 10 years. In March 2009 the price tag for the S&P 500 was 13 times earnings. That said you were going to make about 10% a year plus inflation for seven years.
Jeremy Grantham
[In July 2012.] You make your money by pushing stocks up, but then inevitably the market must go back to fair value. When it does, it creates an anti-wealth effect, usually at the worst possible time.
Jeremy Grantham
[In March 2013.] I’m not optimistic about the common sense of… our species.
Jeremy Grantham
[In March 2013.] There is an enormous pressure in the investment business to deliver good news. Trust me. Good news sells better, stockbrokers thrive on it. Investment houses thrive on it. To go out there in a bubble and talk about badly overpriced markets and downside risks is an invitation to get fired. They simply don`t want to hear it…
Jeremy Grantham
[In March 2013.] We lost half our book of business in `98 and `99 as the great tech bubble rolled up.
Jeremy Grantham
[In March 2013.] The spokespeople for the great investment firm were saying, ‘Oh, Jeremy, don’t be hysterical. Everything will work out fine.’ We said ‘Look at the numbers.’ Every bubble of an asset class in the financial world has always broken back to the original trend.
Jeremy Grantham
[In March 2013.] Markets can be from time to time crazily inefficient as we have seen over and over again in history. And any pretense to the contrary is really in defense of some elegant economic theory.
Jeremy Grantham
[In March 2013.] Economic theory doesn’t work with human beings. We’re far too messy. So economic theory assumes that we’re incredibly well-informed, that the buyers know just as well as the sellers, which is complete nonsense as everyone knows, and that we’re rational and cool and keep a cool head.
Jeremy Grantham
[In March 2013.] Bernanke has inherited a more completely academic view that the markets are pretty efficient.
Jeremy Grantham
[In March 2013.] In the great bubble of 2000, there weren’t many people who were willing to debate the bulls. And so they dragged me out over and over again. And I thought well, if we’re going to go down with the ship, we might as well go down with the flag flying. So I went out and debated them. And my price for giving a talk amongst professionals, say the annual bash of the financial analyst, 1,200 people in Los Angeles, was to say how many of you are full-time stock professionals, and 300 people put their hands up. I say right, I have just two questions. If the price earnings, the measure of how expensive the market is currently 32 - if it goes down to 17, which is trend line, will it guarantee a major bear market? Every single one of the 300 agrees. And by the end I had 1,200 votes of full- time professionals. So they all agreed, every single one of the 1,200, if it went down to 17 times earnings, it guaranteed a major bear market if it happens within a 10 yr window. So the jackpot question is how many of you think it will? And it was so shocking to me I had to rephrase the question three times before I would actually - Only seven people thought it would not go down.
Jeremy Grantham
[In March 2013.] The nice thing about bubbles is you don’t have to predict them, you just wait and see. And when you see one you jump.
Jeremy Grantham
[In March 2013.] I can prove that debt does not generate long-term growth…
Jeremy Grantham
[In March 2013.] By keeping interest rates low, you’re transferring money away from retirees who spend every penny and are really hurting. And by the way, there’s far more of them every year now than there ever was when economic theories were being panned out. You take money from them, and who are the beneficiaries…
Jeremy Grantham
[In March 2013.] How you manage debt is an art form.
Jeremy Grantham
[In August 2013.] I like to be right. I try not to miss the big ideas…
Jeremy Grantham
[In September 2013.] The stock market is patience and value and mean reversion.
Jeremy Grantham
[In February 2014.] Inside advice… from friends in the company is a particularly dangerous basis for decisions; you know how limited their knowledge really is and you are overexposed to sustained enthusiasm.
Jeremy Grantham
[In February 2014.] Fraud, near-fraud or colossal incompetence can always strike.
Jeremy Grantham
[In February 2014.] Investing when young will start your brain turning on things financial.
Jeremy Grantham
[In March 2014.] There are two good standards for a bubble. One is boring statistics, and the other is an exciting behavioral frenzy…
Jeremy Grantham
[In March 2014.] There has never been a bubble where individuals were not flooding into the market at the very end, though sometimes they are pretty late to the game. By the end of a real bubble, individuals are gung-ho…
Jeremy Grantham
[In March 2014.] The 2000 bubble and the ensuing collapse - the biggest bubble in American equity history.
Jeremy Grantham
[In March 2014 on the fed bailing out the housing bust.] It is like rewarding the captain of the Titanic for helping women and children into the lifeboats with admirable bravery, forgetting that it was only his recklessness in driving through the dark night in a famously glacier-intensive part of the ocean that caused the accident in the first place.
Jeremy Grantham
[In March 2014.] Bubbles don't usually stop until sensible investors, value investors, and prudent investors have been hung out to dry and kicked around the block.
Jeremy Grantham
[In March 2014.] In the economic crisis after World War I, there was no attempt at intervention or bailouts, and the economy came roaring back. In the S&L crisis, we liquidated the bad banks and their bad real estate bets. Property prices fell, capitalist juices started to flow, and the economy came roaring back. This time around, we did not liquidate the guys who made the bad bets.
Jeremy Grantham
[In March 2014.] There is no evidence at all that quantitative easing has boosted capital spending. We have always come roaring back from recessions, even after the mismanaged Great Depression. This time we are not. It's anecdotal evidence, but we have never had such a limited recovery.
Jeremy Grantham
[In March 2014.] I agree that the Fed can manipulate stock prices. That's perhaps the only thing they can do. But why would you want to get an advantage from the wealth effect when you know you are going to have to give it all back when the Fed reverses course. At the same time, the Fed encourages steady increasing leverage and more asset bubbles.
Jeremy Grantham
[In March 2014.] Over the next seven years, we think the market will have negative returns. The next bust will be unlike any other, because the Fed and other centrals banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before. Assets are overpriced generally. They will be cheap again. That's how we will pay for this. It's going to be very painful for investors.
Jeremy Grantham
[In March 2014.] To invest our clients' money on the basis of speculation being driven by the Fed's misguided policies doesn't seem like the best thing to do with our clients' money.
Jeremy Grantham
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