Jeremy Grantham is buying equities again, even though he thinks shares may fall another 50 percent.
A couple of weeks ago, Grantham, chairman of institutional money manager GMO, said it was too early for investors to wade back into the stock market.
Now, with shares at their lowest level since 1987, Grantham says he's changed his mind.
"We're buying carefully and slowly," Grantham told Morningstar. "When bubbles correct, they usually overcorrect, so that the market is selling well below fair value."
Grantham, who prefers blue chips to small caps, is now neutral on financials, a sector he has long disliked, because he believes most of the credit crisis is over.
"We at GMO have a strong value bias, and our curse, therefore, like all value managers, is being too early," Grantham wrote in his investment newsletter.
"(However,) with the S&P at 900, stocks are cheap in the United States, and cheaper still overseas."
With this strategy shift, Grantham joins a growing list of value investors who see current prices as a huge buying opportunity.
That group includes Berkshire Hathaway chair Warren Buffett, who is now buying equities for his personal portfolio, an account in which he previously held only bonds.
"A simple rule dictates my buying. Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors," Buffett wrote in The New York Times.
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