Not done yet, but Jeremy Grantham is definitely one of the investors I most respect, particularly since Soros is more or less retired from the scene. On the other hand, as compelling as the logic is, this has been a losing bet for me, financially, and in my first career. I still agree with it, but somehow the system has figured out how to dodge the bullets for so long that I have no idea when this thing will pay off. It’s like trying to time a bubble, except that this one takes a generation or so to happen. Increasingly, I’ve been thinking that the key struggle we are dealing with is that the problems that we have now have taken decades to mature to the point where they are now. That means that for 20-30 years, people with cautious, thoughtful approaches to these problems have been eroded away, whereas risk-takers, including a very large number of undisciplined risk-takers have been rewarded. We interpret the success of these guys as proof that they know what they’re doing, and the underperformance of the cautious guys as proof that they don’t. And so we have few people with credibility that can approach these problems in a rational way, and lots of people whose response to bubbles, resource constraints, etc., is “who could have known??” and “bailout package, please,” along with “OMG, INFLATION! NO SOUP FOR YOU!” Stop the world, I’m ready to get off.
naturallight Wrote: ------------------------------------------------------- > http://www.gmo.com/websitecontent/JGLetterALL_1Q11 > .pdf great read - thanks for that
Yes, I forgot to say thanks for posting it!
Conclusion The U.S. and every other country need a longer-term resource plan, especially for energy, and we need it now! Is this it. Is this all that ground breaking? Did I miss the point? I did not read it all, just the beginning and the end.
Muddahudda Wrote: ------------------------------------------------------- > Is this it. Is this all that ground breaking? Did > I miss the point? I did not read it all, just the > beginning and the end. I know right? I do have respect for G in general, but this was not his finest work. He’s basically calling for a permanently high plateau for commodities (a la stocks in 1929) when in reality this multi-year rip is temporary. The surprisingly high emerging markets growth in the past 5-10 years will in all likelihood not continue; increased commodity production will come online too, leading to a reduction/collapse in prices. If you look at his custom commodity index graph (Exhibit 2), commodities have ripped to the current (high) level several times throughout history, only to resume the long-term trend downward within 5-10 years. From this perspective, it looks like a major sell.
He is a good read for sure. Just that every country is already looking at longer term resource plans especially replacing oil (e.g. Brazil ethanol, alternatives) as well as securing a bit more of the existing stuff (Iraq, Libya). This is not news. I also happen to think we will go through a normal & healthy process of creative destruction if we were ever to get too close to a tipping point and we are not there yet.
Would be interesting to see what investment recommendations he gives… (‘coming soon’ as mentioned at the end)… Names like DD, DAR, MON maybe?
justin88 Wrote: ------------------------------------------------------- > Muddahudda Wrote: > -------------------------------------------------- > ----- > > Is this it. Is this all that ground breaking? > Did > > I miss the point? I did not read it all, just > the > > beginning and the end. > > I know right? I do have respect for G in general, > but this was not his finest work. > > He’s basically calling for a permanently high > plateau for commodities (a la stocks in 1929) when > in reality this multi-year rip is temporary. The > surprisingly high emerging markets growth in the > past 5-10 years will in all likelihood not > continue; increased commodity production will come > online too, leading to a reduction/collapse in > prices. > > If you look at his custom commodity index graph > (Exhibit 2), commodities have ripped to the > current (high) level several times throughout > history, only to resume the long-term trend > downward within 5-10 years. From this > perspective, it looks like a major sell. I agree with Justin… Further I think this is a piece of s h i t. Exhibit 2 clearly showed that this spike and fall trend repeats itself several time. This time is no different. Also, to be fair to China, US still consumes more than 2x the crude China does, per Int’l Engergy Agency. That said, thanks for posting this though.
^ I haven’t had a chance to read it, but isn’t the whole point of the piece that he is saying that prior trends are no longer relevant? In general, I think that looking at a long term graph of what has happened in the past and assuming it will continue in the future is shallow analysis. I’m not saying whether it will or won’t be any different this time (I haven’t read the article yet to form any sort of opinion on that) but it’s certainly not out of the realm of possibility.
king_kong Wrote: ------------------------------------------------------- > ^ I haven’t had a chance to read it, but isn’t the > whole point of the piece that he is saying that > prior trends are no longer relevant? > > In general, I think that looking at a long term > graph of what has happened in the past and > assuming it will continue in the future is shallow > analysis. I’m not saying whether it will or won’t > be any different this time (I haven’t read the > article yet to form any sort of opinion on that) > but it’s certainly not out of the realm of > possibility. yes, he said something about having a 1/4 of his portfolio allocated to commodities as any blip in Chindia growth would be sure to dent the commodity story, but in his view, this is a paradigm shift (he’s hinting but not directly saying that this may be the start of a multi-decade bull market) and he mentioned he would double, triple or quadruple down in the event of a selloff in commodities, as he would view that as a healthy retracement in a long-term bull market. statistically, the idea of this being a trend reversal is quite convincing (i.e. erasing 100 years of losses in 8 years, most of which was done without overly easy money policies, relative to today at least), but looking at the chart from a chartist POV, the commodity bull is definitely due for a pullback, at least temporarily.
king_kong Wrote: ------------------------------------------------------- > ^ I haven’t had a chance to read it, but isn’t the > whole point of the piece that he is saying that > prior trends are no longer relevant? > > In general, I think that looking at a long term > graph of what has happened in the past and > assuming it will continue in the future is shallow > analysis. I’m not saying whether it will or won’t > be any different this time (I haven’t read the > article yet to form any sort of opinion on that) > but it’s certainly not out of the realm of > possibility. Ha! King Kong! You made two points 1) you haven’t read the piece, 2) anything is possible. That’s the classic defination of B.S. Isn’t it, buddy?
^ And you made one point - you looked at an exhibit and said that prices will follow past patterns. Congrats - a monkey could do that.
Ha! At least I read through the 38 pages and formed my opinion. Hopefull you have no harsh feeling as these are just forum stuff. BTW, a guy named King Kong made fun of monkey… Well done…
Bchadwick, I hear your pain and I have been pondering on the same issue. I think the basic assumption he and every other commodity bulls are making is: as population/living standard going up, new middle class and emerging countries like BRICs will push the demand up, permanently, more or less. I am not smart enough to predict the end but the market always have its own way of making fun of crowds. At the mean time, I guess disciplined assets allocation is always the safer middle ground to play.
AlphaSeeker Wrote: ------------------------------------------------------- > justin88 Wrote: > -------------------------------------------------- > ----- > > Muddahudda Wrote: > > > -------------------------------------------------- > > > ----- > > > Is this it. Is this all that ground breaking? > > Did > > > I miss the point? I did not read it all, just > > the > > > beginning and the end. > > > > I know right? I do have respect for G in > general, > > but this was not his finest work. > > > > He’s basically calling for a permanently high > > plateau for commodities (a la stocks in 1929) > when > > in reality this multi-year rip is temporary. > The > > surprisingly high emerging markets growth in > the > > past 5-10 years will in all likelihood not > > continue; increased commodity production will > come > > online too, leading to a reduction/collapse in > > prices. > > > > If you look at his custom commodity index graph > > (Exhibit 2), commodities have ripped to the > > current (high) level several times throughout > > history, only to resume the long-term trend > > downward within 5-10 years. From this > > perspective, it looks like a major sell. > > I agree with Justin… Further I think this is a > piece of s h i t. Exhibit 2 clearly showed that > this spike and fall trend repeats itself several > time. This time is no different. > > Also, to be fair to China, US still consumes more > than 2x the crude China does, per Int’l Engergy > Agency. > > That said, thanks for posting this though. http://in.reuters.com/article/2011/05/09/us-financial-oil-rout-idUSTRE7480AI20110509 Bang!