Jeremy Grantham 3Q letter - Night of the Living Fed

I know everyone's been looking for the recent 3Q 2010 GMO update from Jeremy Grantham, so I thought I'd post the Scribd doc. version here.

Tuck in and enjoy Grantham's macro view of the markets and the economy, from gold and commodities to real estate, stocks, and quantitative easing in, "Night of the Living Fed".


Night of the Living Fed Jeremy Grantham

Ira Sohn Conference notes: Marketfolly

Marketfolly has put together a nice, detailed post on the recent Ira Sohn Conference and the investing ideas offered up by some leading hedge fund managers and investors at this event.

If you haven't heard the chatter about this event, we can tell you that there were some very notable speakers present, including investors David Einhorn (Greenlight Capital), Bill Ackman (Pershing Square Capital), David Tepper (Appaloosa Management), Seth Klarman (Baupost Group), Jeremy Grantham (GMO), and historian Niall Ferguson.

Jay has summarized some of the main points and highlights from the speaker presentations, with the help of some Marketfolly readers who were good enough to share their notes from the conference. You'll also find links to additional coverage on Twitter and at Barron's.

Update: new Marketfolly posts highlighting David Einhorn's presentation and Steve Eisman's presentation, "Subprime Goes to College", have been added.

Also, if you'd like to find out more about the Ira Sohn Research Conference Foundation, which is "dedicated to the treatment and cure of pediatric cancer and other childhood diseases", have a look at the conference home page. You can learn more about their mission and make a donation to the foundation from their website.

Features of the week

Some Friday reading (and viewing) for ya.

1. Obama challenges financial industry to join regulatory overhaul - Bloomberg.

2. Marc Faber says China exhibits 'Danger Signals', symptoms of bubble building (w/ video) - Bloomberg.

3. Jeremy Grantham on bubbles - FT.com.

4. Renegonomics: are deadbeat borrowers fueling consumption? - Laurence Hunt's Blog.

5. Rail traffic recovery continues - PragCap.

6. John Paulson turns bullish on housing, economy - MarketWatch.

7. View From the Top: Mohamed El-Erian talks to FT about economic recovery, the US dollar, and the state of financial markets - FT.com

Thanks for checking in at Finance Trends; you can keep up with our posts and musings via RSS and Twitter. Have a great weekend, and be excellent to each other.

Jeremy Grantham GMO 3Q letter

GMO chief investment strategist, Jeremy Grantham is out with the firm's latest missive to investors; the GMO quarterly letter for 3Q 2009 is available at the GMO website and at Zero Hedge.

For a quick preview, here are some excerpts from Business Insider:

"The idea behind my forecast six months ago was that regardless of the fundamentals, there would be a sharp rally [to S&P 1000-1100]. After a very large decline and a period of somewhat blind panic, it is simply the nature of the beast. Exhibit 1 shows my favorite example of a last hurrah after the first leg of the 1929 crash…

Today there has been so much more varied encouragement for a rally than existed in 1930. The higher prices preceding this crash (that were far above both trend and fair value) had lasted for many years; from 1996 through 2001 and from 2003 through mid-2008.

This time, we also saw history’s greatest stimulus program, desperate bailouts, and clear promises of years of low rates. As mentioned six months ago, in the third year of the Presidential Cycle, a tiny fraction of the current level of moral hazard and easy money has done its typically great job of driving equity markets and speculation higher.

In total, therefore, it should be no surprise to historians that this rally has handsomely beaten 46%, and would probably have done so whether the actual economic recovery was deemed a pleasant surprise or not.

Looking at previous “last hurrahs,” it should also have been expected that any rally this time would be tilted toward risk-taking and, the more stimulus and moral hazard, the bigger the tilt. I must say, though, that I never expected such an extreme tilt to risk-taking: it’s practically a cliff! Never mess with the Fed, I guess…"

Catch the full report at the links above. Should be an insightful read, as always.

Related articles and posts:

1. Jeremy Grantham: first TV interview - Finance Trends.

2. Seasoned investors search for value - Finance Trends.

3. Grantham profiles in Barron's, Financial Times - Finance Trends.