In his recent interview with VettaFi, Jeremy Grantham was asked where he sees value for investors today. Grantham sees better value outside the US, especially in emerging markets and Japan. He emphasizes quality companies for US exposure and diversification through resources. He acknowledges concerns about broader economic trends but believes some asset classes can offer protection.
Here’s an excerpt from the interview:
Grantham: The rest of the world is looking much cheaper than the U.S. Emerging is very cheap.
We’re also particularly interested in Japan. It has been doing well lately and looks to be in the midst of a multiyear, steady improvement of the effectiveness of its corporate system. Japan was always a laggard there, but now it’s catching up.
They have a 30- or 40-year head start versus the rest of the world on facing population problems and have adjusted already.
But you also have to own the U.S., and I’d own U.S. quality. Quality, although not spectacularly cheap today, has a long history of slightly underperforming in bull markets and substantially outperforming in bear markets.
Even as the odds now of a longer-term bear market are good, this time quality has outperformed in a bull market too, which is a bonus!
Resources are very cheap, as they usually are, which is why they tend to do well. In the very long run, they’re finite and running out, and so their prices will rise. Right now, I worry about longer-term growth trends like geopolitical problems and slowing productivity.
Resources are counter-trend; they tend to do well in serious longer-term negative movements in the economy, and at long horizons they’re negatively correlated to the broader stock market. They’re far and away the most diversifying group.
You can read the entire interview here:
Jeremy Grantham Interview – VettaFi
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