Tags: grantham | investing | plan

Grantham: Defeat Investing Fear With A Plan

By    |   Monday, 04 May 2009 03:14 PM EDT

If you’re anxious about wading back into the stock market, you’re not alone. Even professional investors struggle with paralyzing fear sometimes, says GMMO chairman Jeremy Grantham.

The difference is, Grantham says, professional investors usually have a plan that helps them overcome their anxieties.

Grantham has a three-point program he says will help investors to overcome their fears and start making money in the market again:

First, accept that you will never catch the market bottom.

Two, develop a battle plan to get back into the market.

Finally, stick to it.

"This is what we have been doing at GMO," Grantham told MSNBC.

"We made one very large reinvestment move in October, taking us to about halfway between neutral and minimum equities, and we have a schedule for further moves contingent on future market declines."

Grantham has definitely moved from bearish to bullish.

He recently he put the S&P 500's fair value at 900 with expected annual equity returns ranging from 10 percent to 13 percent after inflation.

The index traded around 900 on Monday, and Dow 8,400.

Alan Brown, chief investment officer at Schroders, clearly disagrees.

"We are still skeptical that green shoots will become a sustainable recovery,” Brown told Reuters UK.

“Our baseline is that we have a very weak recovery next year and one can afford to take time before going into risky assets.”

Schroders is underweight stocks and alternative assets, and overweight bonds especially in investment grade and high-yield paper as well as government debt and neutral cash.

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InvestingAnalysis
If you’re anxious about wading back into the stock market, you’re not alone. Even professional investors struggle with paralyzing fear sometimes, says GMMO chairman Jeremy Grantham.The difference is, Grantham says, professional investors usually have a plan that helps them...
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2009-14-04
Monday, 04 May 2009 03:14 PM
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