Quants vs.Traditional Stock Pickers
Jeremy Grantham's quarterly report is always worth a read. He owns and manages an investment management firm GMO. His bearish opinions on markets were early but he certainly isn't a permabear like some. His latest article talks about market models and how to account for rare one off events. He was warning about the U.S. housing bubble for at least two years.
Currently, he makes a case for quality blue chips. (I think XLP qualifies here) He also says that emerging markets might be the place if the U.S. economy can muddle through. He also suggestedg hedging these positions by shorting the Russell 2000. (low quality small caps)
Maybe we should take advantage of further market volatility to add an emerging market ETF?
Labels: emerging markets, GMO
posted by Des @ 1/24/2008 12:04:00 PM
3 Comments:
sorry the link takes you to their website but you have to register to get access. Registration is free and you just need an email address to access the article which is a PDF.
I'm having trouble registering. Can someone email me the PDF file? Thanks
Eddie
It's a good article, but I find it hard to digest his suggestion of *both* quality (XLP) and Emerging markets. (These guys can make an argument for anything, that's what they do!)
Our XLP strategy was short term, to ride out the volatility, and then trade into other assets when there are better opportunities. I'm still good with that.
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