Jeremy Grantham’s 1Q09 Letter: Fantastic as usual

[patientrenter]

scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.

[Allan from Fallbrook]

[quote=scaredycat]I tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.

you can’t run your car on cash. [/quote]

Scaredy: Perfect. Let’s look at gold going back that far (or farther). Use either the Sumerians or the Egyptians as a point of reference (and, yes, there are trading records dating that far back). Now, compare gold to, say, livestock or agricultural holdings. How does gold perform?

Historically speaking, gold has never shown intrinsic value. It’s worth is derived from whatever value is assigned to it. The Spaniards or Elizabethan English may have placed great value in gold, but less as a store of value and more as a means to finance the various wars and commercial enterprises they had going. There are points in history where salt, spices and certain hardwoods had more value than gold.

You’re buying into the notion that gold (or silver) will have intrinsic value if the paper currency collapses. Well, I have news for you. Prior to 1971, the paper currency’s value was tied to existing gold reserves. Do you think that prior to 1971 there were no boom and bust cycles? Or inflationary and deflationary cycles?

Yours are specious arguments and not supported by fact or history.

[Allan from Fallbrook]

[quote=scaredycat]I tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.

you can’t run your car on cash. [/quote]

Scaredy: Perfect. Let’s look at gold going back that far (or farther). Use either the Sumerians or the Egyptians as a point of reference (and, yes, there are trading records dating that far back). Now, compare gold to, say, livestock or agricultural holdings. How does gold perform?

Historically speaking, gold has never shown intrinsic value. It’s worth is derived from whatever value is assigned to it. The Spaniards or Elizabethan English may have placed great value in gold, but less as a store of value and more as a means to finance the various wars and commercial enterprises they had going. There are points in history where salt, spices and certain hardwoods had more value than gold.

You’re buying into the notion that gold (or silver) will have intrinsic value if the paper currency collapses. Well, I have news for you. Prior to 1971, the paper currency’s value was tied to existing gold reserves. Do you think that prior to 1971 there were no boom and bust cycles? Or inflationary and deflationary cycles?

Yours are specious arguments and not supported by fact or history.

[Allan from Fallbrook]

[quote=scaredycat]I tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.

you can’t run your car on cash. [/quote]

Scaredy: Perfect. Let’s look at gold going back that far (or farther). Use either the Sumerians or the Egyptians as a point of reference (and, yes, there are trading records dating that far back). Now, compare gold to, say, livestock or agricultural holdings. How does gold perform?

Historically speaking, gold has never shown intrinsic value. It’s worth is derived from whatever value is assigned to it. The Spaniards or Elizabethan English may have placed great value in gold, but less as a store of value and more as a means to finance the various wars and commercial enterprises they had going. There are points in history where salt, spices and certain hardwoods had more value than gold.

You’re buying into the notion that gold (or silver) will have intrinsic value if the paper currency collapses. Well, I have news for you. Prior to 1971, the paper currency’s value was tied to existing gold reserves. Do you think that prior to 1971 there were no boom and bust cycles? Or inflationary and deflationary cycles?

Yours are specious arguments and not supported by fact or history.

[Allan from Fallbrook]

[quote=scaredycat]I tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.

you can’t run your car on cash. [/quote]

Scaredy: Perfect. Let’s look at gold going back that far (or farther). Use either the Sumerians or the Egyptians as a point of reference (and, yes, there are trading records dating that far back). Now, compare gold to, say, livestock or agricultural holdings. How does gold perform?

Historically speaking, gold has never shown intrinsic value. It’s worth is derived from whatever value is assigned to it. The Spaniards or Elizabethan English may have placed great value in gold, but less as a store of value and more as a means to finance the various wars and commercial enterprises they had going. There are points in history where salt, spices and certain hardwoods had more value than gold.

You’re buying into the notion that gold (or silver) will have intrinsic value if the paper currency collapses. Well, I have news for you. Prior to 1971, the paper currency’s value was tied to existing gold reserves. Do you think that prior to 1971 there were no boom and bust cycles? Or inflationary and deflationary cycles?

Yours are specious arguments and not supported by fact or history.

[Allan from Fallbrook]

[quote=scaredycat]I tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.

you can’t run your car on cash. [/quote]

Scaredy: Perfect. Let’s look at gold going back that far (or farther). Use either the Sumerians or the Egyptians as a point of reference (and, yes, there are trading records dating that far back). Now, compare gold to, say, livestock or agricultural holdings. How does gold perform?

Historically speaking, gold has never shown intrinsic value. It’s worth is derived from whatever value is assigned to it. The Spaniards or Elizabethan English may have placed great value in gold, but less as a store of value and more as a means to finance the various wars and commercial enterprises they had going. There are points in history where salt, spices and certain hardwoods had more value than gold.

You’re buying into the notion that gold (or silver) will have intrinsic value if the paper currency collapses. Well, I have news for you. Prior to 1971, the paper currency’s value was tied to existing gold reserves. Do you think that prior to 1971 there were no boom and bust cycles? Or inflationary and deflationary cycles?

Yours are specious arguments and not supported by fact or history.

[Allan from Fallbrook]

[quote=patientrenter]scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.[/quote]

PR: Very well put and right on the money. True value investing has a long time horizon and requires a diverse set of holdings across various asset classes (or a finely tuned sense of discipline in a narrow set of asset classes that the investor is extremely well versed in).

The gold drum has been beaten very loudly as of late and it sounds like scaredy is listening intently.

[Allan from Fallbrook]

[quote=patientrenter]scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.[/quote]

PR: Very well put and right on the money. True value investing has a long time horizon and requires a diverse set of holdings across various asset classes (or a finely tuned sense of discipline in a narrow set of asset classes that the investor is extremely well versed in).

The gold drum has been beaten very loudly as of late and it sounds like scaredy is listening intently.

[Allan from Fallbrook]

[quote=patientrenter]scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.[/quote]

PR: Very well put and right on the money. True value investing has a long time horizon and requires a diverse set of holdings across various asset classes (or a finely tuned sense of discipline in a narrow set of asset classes that the investor is extremely well versed in).

The gold drum has been beaten very loudly as of late and it sounds like scaredy is listening intently.

[Allan from Fallbrook]

[quote=patientrenter]scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.[/quote]

PR: Very well put and right on the money. True value investing has a long time horizon and requires a diverse set of holdings across various asset classes (or a finely tuned sense of discipline in a narrow set of asset classes that the investor is extremely well versed in).

The gold drum has been beaten very loudly as of late and it sounds like scaredy is listening intently.

[Allan from Fallbrook]

[quote=patientrenter]scaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.

Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.

Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.

If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.[/quote]

PR: Very well put and right on the money. True value investing has a long time horizon and requires a diverse set of holdings across various asset classes (or a finely tuned sense of discipline in a narrow set of asset classes that the investor is extremely well versed in).

The gold drum has been beaten very loudly as of late and it sounds like scaredy is listening intently.

[paramount]

Man of Truth states that Gold will be at $2000 within 12 months.

[paramount]

Man of Truth states that Gold will be at $2000 within 12 months.

[paramount]

Man of Truth states that Gold will be at $2000 within 12 months.

[paramount]

Man of Truth states that Gold will be at $2000 within 12 months.

[Author]

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