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A Few Fresh Investment Insights

Last update on: Jun 18 2020

Most of you probably haven’t heard of James Montier. He’s with the investment firm GMO and before that was with a prominent international financial services firm. He’s fairly well known among institutional investors because of some novel investment insights he’s had, always backed by research. His research product always is provocative and fun to read. He’s a value-oriented investor who’s always looking for a margin of safety. I thought you’d benefit from this interview he gave to Advisor Perspective in which he summarizes some of his interesting views and research results.

That is the $64 million question right now.
The issue is, as you quite rightly point out, everything is expensive right now.
How do you build a portfolio that recognizes the fact that cash is generating negative returns, and bonds are now more attractive than they were, but still not enticing in any great sense?
The answer is, you have to recognize that this is the purgatory of low returns. This is the environment within which we operate. As much as wish it could be different, the reality is it isn’t, so you have to build a portfolio up that tries to make sense.
That means owning some equities where you think you’re getting at least some degree of reasonable compensation for owning them, and then basically trying to create a perfect dry?powder asset. The perfect dry?powder asset would have three characteristics: it would give you liquidity, protect you against inflation and it might generate a little bit of return.

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