During his recent interview with Rosenberg Research, Jeremy Grantham discussed the three areas to own in U.S Equities. Here’s an excerpt from the interview:
Grantham: But the main thing is avoid the U.S. Because of this rather strange, almost inexplicable bias. The U.S is so much more expensive this time around.
In 2000, everybody was expensive. This time around the U.S is expensive and the rest of the world is not particularly expensive.
So you have a great opportunity really to go into the emerging market, in the developed world, and buy some equities, and not feel too guilty.
And GMO in its asset allocation is doing precisely that. But don’t own short term U.S equities. If you want to have U.S equities because you have to, then for heaven’s sake play the long game and do resources and climate change. And pretty well stay away from everything else.
Deep value, by the way, is not that bad either. So if you wanted to add a third one, medium value is not interesting at all. It did too well too quickly.
Deep value, of course deep value is in the way of a major meltdown also. So you have a risk return there. They are out of line cheap, way in the 10% trade off against the rest of the market.
But you could argue that they have pretty high risk too. So you want to be a bit careful. But they’re the three areas. If you had to own US equities.
You can watch the entire interview here:
Jeremy Grantham on Rosenberg Research
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