📖Jeremy Grantham
Ignore Animal Spirits
Short-term psychology obscures long-term fundamentals.
Markets are driven by psychology in the short term. Ignore the noise and focus on fundamentals.
🏠 Everyday Analogy
📖 Core Interpretation
Jeremy Grantham highlights that many investment mistakes are psychological, not analytical. Managing behavior under stress is as important as finding ideas.
💎 Key Insight：Markets are driven by fear and greed in the short run, but by earnings, dividends, and valuations in the long run. Most investors focus on quarterly results, Fed statements, and momentum. Grantham ignores short-term noise and focuses on 7-10 year fundamentals. This patience allows him to buy when others panic and sell when they're euphoric. Time horizon is a competitive advantage.
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❓ Why It Matters
In volatile markets, fear and greed push investors to buy high and sell low. A behavioral framework reduces avoidable, self-inflicted errors.
🎯 How to Practice
Pre-write decision rules, slow down trades during stress, and separate market emotion from business facts before adjusting positions.
🎙️ Master's Voice
Emerging markets will dominate the 21st century.
Grantham is long-term bullish on emerging markets. Demographics, development, and valuation favor these markets over decades.
⚔️ Practical Guide
✅ Decision Checklist
- Am I exposed to emerging markets?
- Is my allocation appropriate?
- Am I thinking long-term?
📋 Action Steps
- Consider emerging market exposure
- Think in decades
- Assess demographic trends
🚨 Warning Signs
- No emerging market exposure
- Home country bias
- Short-term thinking
⚠️ Common Pitfalls
Following crowd emotion at extremes
Mistaking confidence for certainty
Forcing trades to quickly recover losses
📚 Case Studies
1
Dot-Com Bubble Restraint (1999)
Grantham avoided overvalued tech stocks despite client pressure and soaring Nasdaq indices, focusing on valuation discipline.
✨ Outcome：Underperformed during the mania, then strongly outperformed after the 2000–2002 crash as overpriced tech collapsed.
2
Pre-GFC Housing and Credit Bubble (2007)
GMO cut exposure to U.S. equities and risky credit as valuations and leverage surged, ignoring bullish sentiment and career risk.
✨ Outcome：Lagged slightly before the 2008 crash, then protected capital and outperformed peers when markets plunged.
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