Value investor and author of many books James Montier is now working for Jeremy Grantham's GMO, after jumping ship a couple of times in the past couple of years. He wrote recently a white paper entitled “Was It All Just A Bad Dream? Or Ten Lessons Not Learnt”. The white paper is a good reading material for value investors and can be retrieved here. Yes, you do need to register and login, leaving your email address so they can send you promotional email. But if you do not have the minimum amount that can be invested with GMO, what harm can it done? Aside from James Montier’s writing, the site publishes Jeremy Grantham’s market commentaries periodically, and those are excellent and timely reading too.
Montier is a well-versed writer, as demonstrated by this white paper. Ten lessons in ten pages, worth every bit of time you spend on them. Here are the lessons:
You really do need to get your own copy to appreciate these lessons.
In Lesson 4, James Montier assessed the current stock market valuation level:
However, in Lesson 6, he stated that “quality stocks continue to register as distinctly cheap on our metrics”.
Maybe 2010 is a year for the large cap quality stocks. Among the gurus we track, Donald Yacktman has positioned his portfolio in such a fashion since 3Q09. This morning, I had a piece on Lee Ainslie and we saw he made similar comment.
Montier is a well-versed writer, as demonstrated by this white paper. Ten lessons in ten pages, worth every bit of time you spend on them. Here are the lessons:
1. Market aren’t efficient
2. Relative performance is a dangerous game
3. The time is never different
4. Valuation matters
5. Wait for the fat pitch
6. Sentiment matters
7. Leverage can’t make a bad investment good, but it can make a good investment bad!
8. Over-quantification hides real risk
9. Macro matters
10. Look for source of cheap insurance
You really do need to get your own copy to appreciate these lessons.
In Lesson 4, James Montier assessed the current stock market valuation level:
Regrettably, the current juncture doesn’t offer many exciting value-based opportunities. Most equity markets look roughly fairly valued, while the US is once again looking expensive. This holds true across many valuation approaches (including the GMO 7-year forecasts as well as the Graham and Dodd P/Es), and also across many different asset classes. All of which leads us nicely on to our next lesson.
However, in Lesson 6, he stated that “quality stocks continue to register as distinctly cheap on our metrics”.
Maybe 2010 is a year for the large cap quality stocks. Among the gurus we track, Donald Yacktman has positioned his portfolio in such a fashion since 3Q09. This morning, I had a piece on Lee Ainslie and we saw he made similar comment.
