Jeremy Grantham: 3 Insights From a Top-Down Value Investor – The Motley Fool 06-02-15

Salient to Investors:

Jordan Wathen at TMFValueMagnet writes:

  • Eyquem found that from 1951 to 2013, the lowest PE decile of stocks compounded annual returns of 16.7% versus 9.3% for the highest decile.
  • Never pile in or out of an investment for the simple fear of falling behind.
  • No one gets fired for being average.
  • Individual investors’ single biggest advantage is not having to report to anyone, not having to match the market’s return every year.

Jeremy Grantham says:

  • Financial assets can be overpriced or underpriced but will always return to average.
  • Rewards come from buying cheap assets not from taking risks.
  • Professional investors’ behavior is driven by career risk. Keynes said their primary directive is first and last to keep their jobs and so never, ever be wrong on their own. The great majority therefore go with the flow, either completely or partially, thus creating the momentum that drives prices far above or far below fair price.

Read the full article at http://www.fool.com/investing/general/2015/06/02/jeremy-grantham-3-insights-from-top-down-value-i.aspx

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