August 9, 2013
By Steve Blumenthal
(from the 361 Capital Weekly Research Briefing)
Every quarter for as long as I can remember, I anxiously await Jeremy Grantham’s quarterly investment letter. Jeremy’s firm manages more than $100 billion. I remember how he stuck to his disciplined process in 1999 as more than half the money he was managing left him. Most couldn’t. Many wouldn’t. It is hard to watch your business model crumble.
Smart and humble, he is one of our world’s great thinkers. Grantham sees a low growth environment for many years to come. Nowhere near the hoped for 3% our politicians and central bankers are projecting. Take some time this weekend, grab a coffee and enjoy the interview. The discussion is broad and deep. I promise it will be time well spent.
This week, I discuss three relevant topics:
- Jeremy Grantham – Charlie Rose interview
- Public Debt and Entitlements Chart
- Members of Congress denied access to basic information about NSA
Charlie Rose Interviews Investment Strategist Jeremy Grantham (54 outstanding minutes)
Selected highlights from the interview:
JG: “And so we had this amazing experiment — the biggest economy in the world almost tripling its ratio of debt over a block of time that really counts — 30 years. And what happened in terms of the growth rate of the system, it slowed way down. Now there are other reasons I grant you that. But there`s no room in that equation to believe that increasing debt has anything to do with long-term growth. Is there?
That you triple it, what more can you do, and the growth rate of our system slowed materially? It`s so contrary, isn`t it?
They are the facts. They are so contrary to the general belief. We have been conned into believing by the financial world that debt is everything. Let a bank go, oh my God it would be the end of the world.
CHARLIE ROSE: Would Keynes have agreed with you about debt?
JG: I don`t know. I really don`t know. It`s such a different world now. The levels of debt are so much higher. He would probably have some ingenuous new theory.
CHARLIE ROSE: OK but I mean most people believe that we do have, I mean they look at the percentage of GDP to debt or debt to GDP.
JG: I can prove that debt does not generate long-term growth. I have given you the numbers.
JG: We`ve gotten into a bit of a rat hole and we should be careful getting out of it. But it is not the overwhelming thing that will dominate our future. What it does is it distracts us from the real world.”
Public Debt and Entitlements Chart
As Jeremy reflects, debt is growing at a frightful pace. Given the nature of the Rose/Grantham interview, I include the debt chart I posted in last week’s On My Radar. Click here for the link to the full piece.
The problem is debt. It is slowing us down.
Members of Congress denied access to basic information about NSA
I will tactfully avoid a personal opinion, though the issue is concerning. I do hope that the above cartoon and the following video clip make you smile. Bumps remain, but such is life. There are so many reasons to celebrate, enjoy and purposefully create on the journey ahead. There are also important ways for you to position your portfolio to profit.
Finally, Jeremy noted in his interview with Charlie Rose that he played soccer until he was 62. I share a similar passion and I bet you too may be touched in a positive way by the game (children, grandchildren, spouse, friend and/or you too are a player). If so, I think you will totally enjoy this very funny spoof on soccer.
I’m writing today from beautiful Lake George, NY. The boys are yelling for me to come jump in the lake with them. The weekend starts early for me this week. Wishing you the same.
Have a great weekend!
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
Philadelphia – King of Prussia, PA
steve@cmgwealth.com
610-989-9090 Phone
610-989-9092 Fax
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