Story Comments

Here is a working paper of mine which evaluates the predictions of Grantham's company, GMO. His predictions are looking lots less good over the last year. Ed Tower

http://www.econ.duke.edu/Papers/PDF/GMO_Predictions1.pdf

To iterate bruceartwick posting: Even a broken clock is correct twice a day. Of course Grantham looks sage now, how much upside did he miss in the last five years and is the psychology better to have missed the upside and enjoy the downside, even though both end up at approx the same place with vertigo? There are major systemic risks such as out of control deficit spending financed by China, et al resulting in trade deficits and an unsustainable dollar whose decline will ultimately accelerate its decline due to the socialistic nostrums being recklessly thrown at the symptom not the cause of our financial malady; too much government, not too little! It would be better if Grantham expended his energy on the real problem.

From a Smart Money interview of Aug. 20, 2002 near the bottom S&P 797, on the subject of forcast for 2003, Jeremy Grantham said: 'I'm more confident on a longer horizon that we'll hit 670 and lower'. 'I suspect 2003 will end up being the fourth consecutive down year for the first time since 1932.' 'So my single guess would be that this time next year we'll be down only 5% from here'.
Instead of sinking from the mid 800s that summer we rallied for a 30% gain in 2003 to end at 1150 instead of 670, on a steady climb up to 1500 a few years later in a good cyclical bull market. I think the comments of guys like Grantham, Bill Fleckenstein, James Grant and other perennial bears are highlighted far too often at times like these.