Grantham, Mayo & van Otterloo (GMO)
Co-Founder, Chief Investment Strategist
University of Sheffield & MBA from Harvard Business School
Jeremy Grantham co-founded GMO in 1977 in Boston, Massachusetts. The asset management firm invests across broad asset classes with a focus on long-term, valuation-based investments.
Mr. Grantham’s investment philosophy is centered the view of ‘reversion to the mean’. This view maintains that all asset classes and markets will revert to mean historical levels from highs and lows. GMO identifies historical changes in the markets and forecasts results for seven years ahead. Investments positions are taken in areas of deviation from historical averages, predicting a return to the mean.
Mr. Grantham’s philosophy has garnered him a reputation for identifying speculative market bubbles as they move towards collapse. In a 2007 letter to Fortune Magazine, Mr. Grantham explained the near certainties of falling profit margins, a collapsing housing market and widening risk premiums. The aftermath, Mr. Grantham pointed out, was a return across 34 unique bubbles to their historical means.
Mr. Grantham has recently argued that the rising cost of energy over the past two decades has artificially inflated economic growth, therefore creating a ‘carbon bubble’. GMO has invested heavily into green technologies.
In the wake of the COVID-19 vaccine market rally, Mr. Grantham argued that the stock market is divorced from economic realities, and such realities are insurmountable by fiscal stimulus or a vaccine.
Mr. Grantham is an active philanthropist. In 1997, Mr. Grantham founded the Grantham Foundation For the Protection of the Environment. The legendary investor has also funded climate change centers at Imperial College London and the London School of Economics. In 2019, Mr. Grantham dedicated over $1 billion, 98% of his wealth, to fight climate change.
This interview is exclusively open to LSE students.