Jeremy Grantham

This biography of a living person does not cite any references or sources. Please help by adding reliable sources. Contentious material about living people that is unsourced or poorly sourced must be removed immediately. (October 2009) Find sources: (Jeremy Grantham – news, books, scholar)

Jeremy Grantham is the Chairman of the Board of Grantham Mayo Van Otterloo, a Boston based asset management firm well known among institutional investors, but relatively unknown to retail investors. He is regarded as a highly knowledgeable investor^[who?] in various stock, bond, and commodity markets. Grantham started one of the world's first index funds in the early 1970s. As of early 2009, GMO reported on its web site that it managed more than US $85 billion.

Views on the 2007-2008 Credit Crisis

Grantham has built much of his investing reputation over his long career by correctly identifying speculative market "bubbles" as they were happening and steering clients' assets clear of impending crashes. Grantham avoided investing in Japanese equities and real estate in the late eighties, as well as technology stocks during the internet bubble in the late nineties.

Most recently, Grantham began warning about the overvaluation of equity and credit markets in 2006, well before the start of the present crisis. He is famously quoted as saying, "In five years, I expect that at least one major bank (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private equity firms in existence today will have simply ceased to exist." ^[1]

In his Fall 2008 GMO letter Grantham commented on the underlying causes of the world credit crisis:

"I ask myself, ‘Why is it that several dozen people saw this crisis coming for years?’ I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even [U.S. Treasury Secretary] Hank Paulson and [Fed Chairman Ben] Bernanke — none of them seemed to see it coming.

I have a theory that people who find themselves running major-league companies are real organization-management types who focus on what they are doing this quarter or this annual budget. They are somewhat impatient, and focused on the present. Seeing these things requires more people with a historical perspective who are more thoughtful and more right-brained — but we end up with an army of left-brained immediate doers.

So it’s more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored. . . .

So we kept putting organization people — people who can influence and persuade and cajole — into top jobs that once-in-a-blue-moon take great creativity and historical insight. But they don’t have those skills.” ^[2]

Grantham focused on the issue of personal traits and leadership in trying to explain how we reached the current economic crisis.

Philanthropy

Substantial commitments have been made to both Imperial College and London School of Economics, to establish Grantham Institutes for Climate Change, which will enable both institutions to build on their extensive expertise in climate change research.^{[citation needed]}

References

External links

• http://www.gmo.com
• http://www.businessweek.com/magazine/content/02_11/b3774101.htm
• http://money.cnn.com/magazines/moneymag/moneymag_archive/2003/09/01/348615/index.htm
• http://money.cnn.com/galleries/2007/fortune/0708/gallery.crisiscounsel.fortune/12.html
• http://www.granthamfoundation.org/
• http://www.granthamprize.org/
• http://www.lse.ac.uk/collections/pressAndInformationOffice/newsAndEvents/archives/2008/Granthamlaunch.htm
• http://www.gmo.com/websitecontent/JGLetter_ALL_4Q08.pdf