Jeremy Grantham on the Danger of Sitting in Cash

By on March 20, 2009

Jeremy Grantham points out the opportunity cost of remaining in cash, “In June 1933, long before all the banks had failed or unemployment had peaked, the S&P rallied 105% in six months. Similarly, in 1974, it rallied 148% in five months in the U.K.! How would you have felt then with your large and beloved cash reserves? Finally, be aware that the market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.”

Mr. Grantham sees large cap high quality stocks as being cheap relative to most other assets and expects them to produce after-inflation annualized returns of 11.2% over the next seven years.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>