Jeremy Grantham: keen on emerging markets
Value investor Jeremy Grantham sees better opportunities in emerging markets than in the US over the long term.
"You can't get blood out of a stone." That's the view of value investor Jeremy Grantham on US stocks. "At these prices... over a long horizon like 20 years the US market will be delivering 2% or 3% real" versus 6% on average over the last century or so, he tells CNBC. "It's going to break a lot of hearts when we're right."
Grantham, who founded contrarian asset manager GMO, is much keener on emerging markets, where he reckons that over the same timescale "you can do maybe 7% or 8% if you tilt towards value".
China is "massively outproducing the US in the number of engineers and scientists", which makes "it difficult for them not to take the lead in science" and to surpass the US economy in size within a few years. Meanwhile, India is growing at 6% a year. But more importantly, says Grantham, emerging markets are "much cheaper than normal" right now. He cites The Economist's Big Mac Index, which compares what a hamburger costs in different countries. "It's always been 25% cheaper to buy a Big Mac in an emerging country, but now it's half price. So they're unusually cheap."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Grantham who is a climate activist drives a Tesla, but as a value investor, it's "not his kind of stock". However, he does see huge opportunities for entrepreneurs in tackling environmental charges but only if the US government changes its approach to taxation. "Once you tax carbon... the ingenuity that will spring out of the venture capital (VC) industry will be fabulous... there is a lot of hope if you can release the entrepreneurial and inventive spirit, and a carbon tax would do that."
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Reeves delays cash ISA reform, but savers are not out of the woods yet
The chancellor has reportedly delayed plans to cut the cash ISA limit, which were set to be announced at Mansion House on 15 July, and will take more time to consult with the industry
-
Most common ways that home insurance doesn't pay out: how to protect yourself
In a time of crisis, you want to be certain that your insurance policy will pay out. But there are five common ways that home insurance can be invalidated. We look at each, and examine how to ensure sure you’re protected.