Sunday, April 25, 2010

Invest defensively

Investment expert Jeremy Grantham gives his views via Financial Times video:

  • the UK and Australia are still experiencing bubbles in housing
  • there are potential bubbles in commodities and emerging markets
  • savers are being tempted (I'd say almost forced) into speculating when they should be cautious
  • the US stockmarket is generally overpriced, but...
  • investors should be more interested in big, boring, robust companies such as Coca-Cola, Microsoft and Johnson & Johnson

(htp: Global Perspectives)


James Higham said...

I'd be worried about FT advice - they almost all got it wrong in 2008.

Tyrone said...

I just received a letter from my company savings plan. They are offering five new funds.
1) Gov Short Term Invesment Fun
2) Treasury Inflation-Protected Securities
3) Global Real Estate
4) Emerging Markets Indexed Equity
5) Commodities

This is no doubt in part because people are asking for it. But I think it's possibly due to a large number of people moving their dollars into self-managed accounts. The more dollars move out of the standard funds and the control of the 'plan', the less dollars the 'plan' has to play with. Your statement may say one thing, but they could be playing with dollars in entirely different ways.

Sackerson said...

James - Grantham isn't employed by the FT and he points out that of 34 bubbles, 32 ended where they started; and 2 are in progress.

Tyrone - I guess the issue is, save or speculate, i.e. are you trying to protect the value of what you put by, or get some extra from somebody else in the great game? As liquidity reduces, maybe cautious is the way to go. Unless, of course, you have inside knowledge.

Tyrone said...

I'm cautious. I have no inside knowledge and don't know what, if anything, is going to happen next. However, there seems to be huge amount of pressure building on debt and future obligations (pensions, social security, gov debt, etc), and real estate is also dicey, particularly in some areas of California and elsewhere in the states. The natural thing that may happen is for the government to save all that debt by printing. That probably won't end well. I do hold some gold and silver, and a lot of dollars. I wish I knew where to deploy it all.