My Quarterly Commentary says much of the same things that Mr. Grantham says in Part II of his First Quarter newsletter. He is bearish and likely early, a painful place to be….and he says it much more eloquently than I. Perhaps the most compelling paragraph is as follows”
“The market may still get to, say, 1500 before October, but I doubt it, especially without a QE3, although the chance of going up a little more by October 1 is probably still better than even. And whether it will reach 1500 or not, the environment has simply become too risky to justify prudent investors hanging around, hoping to get lucky. So now is not the time to float along with the Fed, but to fight it. Investors should take a hard-nosed value approach, which at GMO means having substantial cash reserves around a base of high quality blue chips and emerging market equities, both of which have semi-respectable real imputed returns of over 4% real on our 7-year forecast. The GMO position has also taken a few more percentage points of equity risk off the table.”
As I’ve stated earlier, perhaps now is the time to start fighting the Fed. The entire newsletter is below.
Scott Dauenhauer, CFP, MSFP, AIF