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Jeremy Grantham: Mistakes Made Over 47 Years

Posted By Barry Ritholtz On February 7, 2014 @ 7:00 am In Investing,Psychology,Rules | Comments Disabled

Jeremy Grantham’s quarterly GMO letter [1] is out. It is a long rambling look at everything from Tesla to Fracking to Fertilizers to Food.

But the narrative culminates with how as a young lad, Grantham made a trade based on a neighbor — legal inside information. He explains how that worked out, via his 8 lessons learned during his tenure on Wall Street.


Investment Lessons Learned: Mistakes Made Over 47 Years

1) Inside advice, legal in those days, from friends in the company is a particularly dangerous basis for decisions; you know little how limited their knowledge really is and you are overexposed to sustained enthusiasm.

2) Always diversify, particularly for your pension fund.

3) Fraud, near-fraud, or colossal incompetence can always strike.

4) Don’t buy stocks yourself if you’re an amateur: invest with a relatively rare expert or in a low-cost index.

5) Investing when young will start your brain turning on things financial.

6) Painful errors teach you more than success does.

7) Luck helps and finally…

8) Have a convenient mother to be the fall guy.

Good stuff!


Year-End Odds and Ends [1]

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URL to article: http://www.ritholtz.com/blog/2014/02/jeremy-grantham-mistakes-made-over-47-years/

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[1] GMO letter: http://www.gmo.com/websitecontent/GMO_QtlyLetter_ALL_4Q2013.pdf

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