Charlie Rose interviewed GMO’s Jeremy Grantham for Bloomberg Businessweek.
Among other things, Rose asked Grantham how he’ll be investing GMO’s funds next year.
From the interview:
So what will you do next year with all that money you manage?
I am going to be careful, particularly for the first half of next year. Great brands of blue chips are not so bad in the U.S. Emerging countries are about fair price. Beaten-down European stocks, particularly the so-called value stocks, are probably a little cheap, although risky. And resource stocks, once they reflect the weak economy—and we’ll get another whack-down—will be a wonderful long-term purchase. Farmland and forests, which should be the backbone of any long-term, serious portfolio. … It will also be a good time to buy in.
Grantham also said that he has “hero-worshipped the presidential cycle,” which show that the first two years of a president’s term tends to be flat, while the third and fourth years tend to be strong. As such, he thinks investors won’t be missing much by staying out of the markets in the coming year.
For us, the cycle years start on October 1st. So now we’re in the dreaded first year. And we have Republicans threatening to add fiscal constraints into a very fragile economy. We have the European situation. We have China stumbling in an incredible slow-motion style. I think it’s a really good year to keep your head down.
Grantham also discusses demographics, productivity, debt, and the elections.
Read the whole interview at Businessweek.com.