Commentary

“Growth Bubble: Making Money on Companies That Make No Money”

GMO Asset Allocation Team examines the fact that although every bubble is unique, classic common threads also run through everyone.

Commentary

Part 2: What To Do In The Case Of Sustained Inflation

We have a relatively sanguine view on the likelihood of inflation becoming ingrained in the system (much as it pains us to agree with the Fed). However, the dark arts of macroeconomics are notoriously tricky, and we have often talked of the need to build robust (as opposed to optimal) portfolios – effectively, portfolios that can withstand multiple outcomes.

Commentary

2Q 2021 GMO Quarterly Letter

After several strong quarters for value stocks, the last few months have seen a sharp reversal in favor of growth.

Commentary

Part 1: Inflation – Tall Tales And True Causes

Inflation is often a poorly understood concept, with monotheistic explanations abounding.

Commentary

The Best 3-year Period For Value Vs. Growth Also Suffered Some Of Its Worst Drawdowns

The Value vs. Growth reversal, which started in earnest in the late Fall of 2020, generated exciting returns for many of our portfolios through May.

Commentary

GMO 7-year Asset Class Forecast: May 2021

The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through May 2021 (click to view online or see chart below).

Commentary

Quality Investing And Inflation

With inflation spiking as the world adjusts to the post-Covid regime, investors are naturally interested in how their portfolios might perform in an inflationary world.

Commentary

There Are No Bad Assets…Just Bad Prices

In a new Insights piece, GMO’s Asset Allocation Team addresses a common response to bearishness in the current markets.

Commentary

GMO Quarterly Letter: Speculation and Investment

Speculative booms provide both entertainment and outsized profits while they are happening, but they do generally burst painfully,” Inker writes. “Speculative booms provide both entertainment and outsized profits while they are happening, but they do generally burst painfully. This is particularly true in equity markets, where the demand growth is ordinarily met with increased supply from savvy capitalists. Maintaining excess demand in the face of growing supply becomes ever more difficult and eventually proves impossible.

Commentary

A Year Of Investing In Quality Cyclicals

April 3rd marked the 1-year anniversary of the first investments deployed by GMO’s Quality Cyclicals Strategy,1 within a fortnight of the trough that ended 2020’s quickfire bear market.

Commentary

The Duration of Value And Growth

It is commonly assumed that growth stocks are bigger beneficiaries of falling interest rates than value stocks, an assumption driven by a belief that growth stocks are much longer “duration” than value stocks due to the fact that more value in growth companies comes from relatively more distant cash flows.

Commentary

Japan Value: An Island of Potential In A Sea of Expensive Assets

Global stocks and bonds are both expensive. U.S. stocks are trading at particularly elevated valuations with the CAPE ratio standing at 35x (vs. a 10-year average of less than 27x) while the Barclays Bloomberg U.S. Aggregate index offered a negative real yield at the end of February.

Commentary

A Spac-Tacular Distraction

In a new piece from the GMO Event-Driven Team, Doug Francis and Sam Klar discuss the growing supply-demand imbalance in the asset class that has driven focus towards the SPAC boom and away from the opportunity in other investments like merger arbitrage.

Commentary

GMO 7-Year Asset Class Forecast: January 2021

The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.

Commentary

GMO 7-Year Asset Class Forecast: 4Q 2020

GMO 7-Year Asset Class Forecasts: Value vs. growth is coming off its worst year ever.