Grantham's GMO Not As Gloomy On Stocks As You Think

While Jeremy Grantham’s GMO has been gloomy about the outlook on stocks, the firm’s head of asset allocation says there are also good opportunities in the market right now.

“We think there is money to be made,” Ben Inker tells The Boston Globe. “There’s plenty of stuff to be worried about. [But] there’s actually a fair number of stocks worth owning. For us, that’s exciting.”

Inker tells the Globe that it’s a bad time to own bonds, and say many high-quality stocks are cheap right now. He likes dividend payers and large, stable, profitable firms that do well whether the economy is good or bad, like Coca-Cola. He says “places where people seem to have less hope than more” are places to look for stocks, like Japan and Europe.

While many investors run from stocks in tough times, Inker talked about having a longer-term mindset. “People assume that times will be bad forever,” he said. “And when times are good, people assume they’ll be good forever. And they are overwhelmingly wrong in both assumptions.” He thinks the broader U.S. market is overvalued, but adds that “you should not wait until the market is screamingly cheap before you put any money into it.” Avoiding stocks entirely is a risk, he said, and those who do so could “miss out on perfectly good returns.”