Jeremy Grantham's 10 Investment Lessons

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#1
Jeremy Grantham's 10 Investment Lessons
GMO's Jeremy Grantham is out with a February 2012 letter which he has entitled, "The Longest Quarterly Letter Ever." In it, he outlines 10 investment lessons for individual investors.

Jeremy Grantham's 10 Investment Lessons:


1. Believe in history: "history repeats and repeats, and forget it at your peril. All bubbles break, all investment frenzies pass away."

2. Neither a lender nor a borrower be: "Unleveraged portfolios cannot be stopped out, leveraged portfolios can. Leverage reduces the investor's critical asset: patience."

3. Don't put all your treasure in one boat: "This is about as obvious as any investment advice could be ... Several different investments, the more the merrier, will give your portfolio resilience, the ability to withstand shocks."

4. Be patient and focus on the long term: Wait for the good cards. If you've waited and waited some more until finally a very cheap market appears, this will be your margin of safety."

5. Recognize your advantages over the professionals: "The individual is far better-positioned to wait patiently for the right pitch while paying no regard to what others are doing, which is almost impossible for professionals."

6. Try to contain natural optimism: "optimism comes with a downside, especially for investors: optimists don't like to hear bad news."

7. But on rare occasions, try hard to be brave: "You can make bigger bets than professionals can when extreme opportunities present themselves because, for them, the biggest risk that comes from temporary setbacks - extreme loss of clients and business - does not exist for you."

8. Resist the crowd, cherish numbers only: "this is the hardest advice to take: the enthusiasm of a crowd is hard to resist. The best way to resist is to do your own simple measurements of value, or find a reliable source (and check their calculations from time to time) ... and try to ignore everything else."

9. In the end it's quite simple, really: "GMO predicts asset class returns in a simple and apparently robust way: we assume profit margins and price earnings ratios will move back to long-term average in 7 years from whatever level they are today. We have done this since 1994 and have completed 40 quarterly forecasts ... Well, we have won all 40."

10. This above all, to thine own self be true: "To be at all effective investing as an individual, it is utterly imperative that you know your limitations as well as your strengths and weaknesses ... you must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money."



Grantham elaborates on each lesson and address other topics in his full quarterly letter, embedded below:

Read more: http://www.marketfolly.com/2012/03/jerem...z2mqyURBnN
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#2
"4. Be patient and focus on the long term: Wait for the good cards. If you've waited and waited some more until finally a very cheap market appears, this will be your margin of safety."

I like this one... Smile
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
4) In BULL, SELL-SELL-SELL! 
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#3
This No 4 sometimes really will kill you. That is when it first come you just too excited and can't wait anymore. i am still trying to have more patience without fear when it comes. Ha! Ha!
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#4
(12-12-2013, 10:44 PM)brattzz Wrote: "4. Be patient and focus on the long term: Wait for the good cards. If you've waited and waited some more until finally a very cheap market appears, this will be your margin of safety."

I like this one... Smile

if you wait for your particular market/asset class, then must wait to play the cycle. But there are other markets/asset class in different cycle all over the world. 退一步海阔天空。

get ready to be whack if overstep circle of competence.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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#5
(13-12-2013, 07:08 AM)opmi Wrote:
(12-12-2013, 10:44 PM)brattzz Wrote: "4. Be patient and focus on the long term: Wait for the good cards. If you've waited and waited some more until finally a very cheap market appears, this will be your margin of safety."

I like this one... Smile

if you wait for your particular market/asset class, then must wait to play the cycle. But there are other markets/asset class in different cycle all over the world. 退一步海阔天空。

get ready to be whack if overstep circle of competence.
Ha! Ha!
Ya! Get ready to be whacked instead you whacking the Market.
For this reason 99.9% of my investments is in Singapore so far. i believe in home ground advantage just like in a soccer game. Besides our dollar is just too robust to depreciate viz a viz to others dollar.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply


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