📖Jeremy Grantham
Risk-First Approach
Consider the downside before the upside.
Before considering how much you can make, consider how much you can lose. Risk management is not about avoiding risk entirely, but about understanding and controlling it.
🏠 Everyday Analogy
📖 Core Interpretation
Jeremy Grantham treats survival as the first objective. Limiting permanent capital loss, controlling leverage, and avoiding single-point failure are prerequisites for long-term compounding.
💎 Key Insight：Risk management is about understanding, not avoidance.
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❓ Why It Matters
A single large drawdown can erase years of progress. Risk control is not timidity; it is the operating system that keeps compounding alive.
🎯 How to Practice
Define downside scenarios before entry, cap position size, avoid fragile leverage, and maintain liquidity so mistakes remain survivable.
⚠️ Common Pitfalls
Equating volatility with all forms of risk
Oversized positions without an exit plan
Using leverage to compensate for uncertainty
📚 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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