Commentary

Shelter In Credit

Jon Roiter reflects on a wild ride in the high-yield credit market and whether now is the time to capitalize on attractive investments in the space.

Commentary

Fear And The Psychology Of Bear Markets

While it is, of course, a cliché to say that markets are driven by fear and greed, like many clichés this one contains a strong element of truth. The bad news for us humans is that within our brains, emotion appears to have primacy over cognitive function. While this may well have kept us alive and allowed our species to thrive, this uncomplicated hierarchy doesn’t necessarily work in our favour when it comes to thinking about financial markets.

Commentary

An Update on the Current Environment Amid COVID-19

GMO’s Ben Inker discusses the recent turmoil in financial markets and the firm’s perspective on valuations amid the sharp declines in many asset classes.

Commentary

Memo to the Investment Committee: Dare to Be Different

The conventional 60/40 portfolio of today is not going to generate the kind of returns that investors say they need. Investors must seek to embrace the terrifying concept of being different. As the ghosts of many great investors past have amply demonstrated, being different is the path to investment success. However, such advice falls into the simple but not easy category, to borrow Warren Buffett’s expression.

Commentary

60/40 Portfolios Face Double Trouble Ahead

While the passive balanced portfolio (60% stock/40% bond) has outperformed more diversified allocations over the last decade, we believe investors should temper their expectations for a repeat. Two key problems lie ahead for such a portfolio.

Commentary

GMO 7-Year Asset Class Forecast January 2020

Our forecasts for stocks generally improved in January as stocks declined, but they fell for bonds as rates rallied. Coronavirus and growth fears weighed on markets, pushing Value and non-U.S. stocks down most.

Commentary

Chemical Toxicity And The Baby Bust

In today’s society people are choosing to have fewer children, and delaying having children at all into later, less fertile years. These two factors have driven fertility rates below replacement level in most of the world, but a crucial third factor gets little attention and is having a profound impact on fertility: toxicity. The economic and social ramifications will be severe.

Commentary

How Higher Ratings Are Changing Emerging Debt

By moving our USD emerging debt strategy benchmark to the diversified (issuer-capped) version of J.P. Morgan’s EMBIG benchmark, we will limit our exposure to the ballooning issuance of low-return-potential, opaque countries. Our objective is to retain the “high dividend sovereign equity” nature of this asset class for our investors...

Commentary

GMO 7-Year Asset Class Forecasts: An Amazing Capstone To A Risk-On Year

The GMO Asset Allocation team has released its latest 7-Year Asset Class Real Return Forecasts

Commentary

7 Year Asset Class Real Return Forecasts

Emerging market value stocks are the most attractive asset class for two reasons, explains GMO's John Thorndike.

Commentary

Health Insurance Companies: Rhetoric vs. Reality

The policy proposal of "Medicare for All" calls for nationalizing the U.S. health insurance system. While this is a politically unlikely outcome, the stock prices of the private sector Managed Care insurance companies have suffered as rhetoric heats up.

Commentary

Climbing the ESG Learning Curve in Emerging Markets

ESG integration is best used as a tool to improve portfolio returns and/or reduce risk. While usually thought of as a company-level concern, material ESG data can be very useful at the country level as well, especially in emerging markets. ESG signals are only as good as the quality of their inputs.

Commentary

Emerging Market Stocks: Getting Comfortable with the Uncomfortable

In a new GMO Insights piece titled “Emerging Market Stocks: Getting Comfortable with the Uncomfortable,” asset allocation team member Rick Friedman looks at how lackluster emerging market equity returns in recent years have led many investors to write off the asset class, but GMO “humbly suggest(s) investors get more comfortable owning the uncomfortable.”

Commentary

Shades of 2000

The years leading up to the 2000 stock market bubble were extraordinary and unprecedented. They caused unique pain to the portfolios of valuation-driven investors. The valuation extremes, though, created the greatest opportunity set for valuation-driven investors since the Great Depression.

Commentary

Bigger's Been Better

Ben Inker highlights the multiple benefits large U.S. companies enjoy when compared with smaller ones, and examines whether the conditions that have caused this situation will remain in place.