“Presidential Cycle” Stunted by the Fed says Grantham

The phenomenon of robust stock market gains during the third year of a president’s term—coined the “presidential cycle” by fund manager Jeremy Grantham—may have been “killed off” by the Fed, according to an article in the Financial Times. Research conducted by Grantham, founder of the GMO fund management group in Boston, analyzed stock gains during the first, second and fourth years of presidential terms going back to 1932 and found that average gains during those years were 0.2% per month as compared to between 0.75% and 2.5% during the third year. This led to his prediction that the U.S. market […]

Jeremy Grantham’s Outlook for 2016 and Beyond

Jeremy Grantham authored a piece for Barron’s recently in which he argues that “the positive effects of low resource prices are underestimated,” maintains that we are not in a bubble and thus “a major market break [is] unlikely” to occur yet,  and suggests that the longer-term forecast is “rather depressing.” Looking back at 2015, Grantham highlights “the big positive” of Federal Reserve support and “the big negative” of “China slowing down,” as well as “the plunging price of oil,” and the decline in profit margins. Looking at 2016, he notes that “uncertainties are above average,” but suggests growth of “2.5% […]

Jeremy Grantham, Jonathan Jacobson, Seth Klarman and Jeffrrey Vinik: “Below the Radar” Philanthropy of Top Investors to Social Causes

The Boston Globe profiles philanthropy by leading investors. Jeremy Grantham’s foundations, including the $377 million Grantham Foundation for the Protection of the Environment, reflect a movement toward “making big bets on social change philanthropy,” according to Paul Grogan of the Boston Foundation. This is a shift apparent in Grantham’s own remarks: he noted that giving to traditional recipients of philanthropic dollars (such as arts and medical institutions) is “better than nothing. But it isn’t as good as medical research, or more to the point even, critical environmental donations.” Seth Klarman of the Baupost Group is another example of civic and […]

A Bearish View from GMO’s Grantham

Ben Inker and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. issued a quarterly letter suggesting the bull market cannot last much longer. Inker writes that the U.S. has been outperforming for decades but attacks the idea that US stocks are inherently superior even as they grow more expensive. “We cannot completely reject the possibility that those arguments are correct,” he says, “but the evidence seems pretty thin.” Grantham points to the need to address problems, saying: “we are dealing today with important issues, one so important that it may affect the long-term viability of our global society and […]

Grantham Says Our Bias Toward Good News Makes Us Manipulable

In a recent Barron’s excerpt of a longer article, Jeremy Grantham, founder of asset management firm GMO, says Americans “have a broad and heavy bias away from unpleasant data” that makes us “ready to be manipulated by vested interests in finance, economics, and climate change, whose interests might be better served by our believing optimistic stuff ‘that just ain’t so.’” He points to a few examples of propositions that are “widely accepted by an educated business audience . . . but totally wrong.” His examples include the widely held business audience assumption about “how incompetent at business the French are […]