The Long View
The Long View
Jul 10, 2019
James Montier: 'How Do I Get Paid for Owning This Asset?'
53 min

Our guest on this week's installment of "The Long View" podcast is James Montier. Montier is a member of the asset-allocation team at Grantham, Mayo, Van Otterloo & Co. Before joining GMO in 2009, he was co-head of global strategy at Societe Generale. A prolific and incisive writer, Montier has authored several books, including Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance; Value Investing: Tools and Techniques for Intelligent Investment; and The Little Book of Behavioral Investing. He's also a regular contributor to GMO's library of white papers and research studies on topics ranging from productivity, strategic asset allocation, contrarianism, and more. In addition to his duties at GMO, Montier is also a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts.

Background 
Grantham, Mayo, Van Otterloo & Co.

Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance by James Montier 

Value Investing: Tools and Techniques for Intelligent Investment by James Montier 

The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy by James Montier 

GMO's research library  

Montier's articles in GMO's research library 

Montier's Role at GMO
"My role is essentially to be difficult, and it turns out I'm quite good at that." Montier describes his role at GMO and how his contributions to the firm are measured. (1:10-3:11)

Fostering Debate at GMO
"We have never had a house view." Why debate and constructive devil's advocacy is welcome at GMO. (3:12-4:31)

"Investing is one of those fields where there is almost constant evidence that we are all wrong." How to foster humility and a diversity of views. (4:32-7:38)

Debating Jeremy Grantham on mean reversion: Montier gives an example of an issue the team has debated recently--how long it takes for markets to revert to their long-term averages. (7:39-9:36)

Forecasting and Portfolio Construction
How the debate over mean reversion informs GMO's asset-class forecasts. (9:37-10:09)

Corporate concentration and low interest rates: How GMO is reconsidering these variables and their impact on the asset-class forecasts it makes. (10:10-11:38)

"The Idolatry of Interest Rates, Part II: Financial Heresy and Potential Utility in an ERP Framework" by James Montier and Ben Inker (Aug. 11, 2015)

How GMO incorporates its asset-class forecasts into the multi-asset strategies it manages. (11:39-12:37)

  • GMO Benchmark-Free Allocation III GBMFX  

The appeal of a "robust" forecast that's meant to help portfolios withstand various potential outcomes. (12:38-14:15)

"Our portfolios look a little freakish." Montier explains why GMO is U.S.-stock-phobic and, conversely, why the firm is finding value in alternatives. (14:16-18:04)

Career risk: Where individual investors hold an edge over institutions. (18:05-18:55)

Alternatives
Montier defines "alternatives." Different ways of owning standard risks--depression risk, inflation risk, and liquidity. (18:56-21:49)

Montier presents two examples of alternative strategies that GMO employs--merger arbitrage and put-selling--to own standard risks in different ways. (21:50-25:49) 

"We should size them such that they cannot hurt the overall fund should we get something wrong." How GMO sizes its positions in alternative strategies. (25:50-27:33) 

Alpha, beta, and decay: How GMO assesses an alternative strategy's vulnerability to being arbitraged away. (27:34-29:57)

GMO's Bearish U.S. Equity Forecast
"How do I get paid for owning this asset?" Key inputs to GMO's U.S. equity forecast--multiple, margin, yield, and growth. (29:58-32:08)

"A behavioral self-defense mechanism." How GMO's approach to forecasting helps to structure its thinking and anchors decision-making. (32:09-34:54)

"It's really valuation where we've been most wrong." Where GMO's U.S. equity forecast erred in recent years. (34:55-36:01)

"We have to wear that. We have to own it." Montier on steps that GMO has taken to introspect on its forecasting error and how that expresses itself in the way it makes decisions and manages money. (36:02-39:45)

Planning Amid a Dearth of Value
"A reach for yield in any way, shape, or form." Explaining the dearth of value. (39:46-41:43)

"We have always been pretty bad at (forecasting), and it's unlikely we're going to get a lot better." (41:44-44:37)

How should investors and advisors forecast asset-class returns and plan for the future? (44:38-47:25)

Capital Allocation
Montier on the folly of firms borrowing to repurchase shares: "The more stable the environment, the easier it is to take on leverage, but the greater the danger that taking leverage creates further down the line when you get some random shock." (47:26-50:49)

Bogleheads On Investing Podcast
Bogleheads On Investing Podcast
bogleheads
Episode 028: Roger Lowenstein, host Rick Ferri
Roger Lowenstein reported for The Wall Street Journal for more than a decade and is also an award-winning book author. His work has appeared in Bloomberg, The New York Review of Books, Fortune, The New York Times Magazine, and other publications. His best-selling books include Buffett, When Genius Failed, Origins of the Crash, While America Aged, and The End of Wall Street. In this episode, we discuss Roger's books and lessons he learned writing them. This podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adviser. The Bogleheads are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance, and relevant information to other investors of all experience levels at no cost. The organization's free website is Bogleheads.org, and the wiki site is Bogleheads® wiki. Since 2000, the Bogleheads' have held national conferences in major cities around the country. There are also many Local Chapters in the US and even a few Foreign Chapters that meet regularly. New Chapters are being added on a regular basis. All Bogleheads activities are coordinated by volunteers who contribute their time and talent. This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is appreciated.
44 min
WEALTHTRACK
WEALTHTRACK
Consuelo Mack
Medicare & Lockdown: Better than Ever? (U.S.)
According to Medicare benefits expert, Dr. Katy Votava COVID-19 has altered several aspects of Medicare coverage and procedures. She will tell us what’s different and how to take advantage of the changes. She will also help us meet the deadline for Medicare’s annual enrollment period which ends on December 7th and allows medicare beneficiaries to evaluate their Medicare Advantage Plans and part D, prescription drug plans, and shift to different providers if it makes sense.  Votava is a Medicare expert who advises individuals, small businesses, and financial planners from her healthcare consulting business, GOODCARE.com. She is also the author of Making The Most Of Medicare: A Guide For Baby Boomers, now in its 7th edition and an Amazon bestseller. It is a straightforward, easy to navigate guide to Medicare which is a very complex multi-part system that frequently does warrant annual updating by its beneficiaries. An estimated 90 percent of Americans pay too much for their Medicare coverage.  WEALTHTRACK # 1722 published on November 27, 2020 More info: https://wealthtrack.com/how-covid-19-has-changed-medicare-coverage-and-procedures-with-benefits-expert-katy-votava/ Medicare.gov – The official U.S. Government site for Medicare 1-800-MEDICARE Shiptacenter.org – The State Health Insurance Assistance Program (SHIP) site that directs consumers to free Medicare counseling and assistance Eldercare.acl.gov - Eldercare locator, a public service of the U.S. Administration of Aging, connecting you to services for older adults and their families. 1-800-677-1116    Making The Most Of Medicare: A Guide For Baby Boomers: https://amzn.to/33mW4Rs --- Support this podcast: https://anchor.fm/wealthtrack/support
19 min
Alpha Trader
Alpha Trader
Seeking Alpha
Investment choices of the pros - author Brian Portnoy joins Alpha Trader
This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brian Portnoy, the founder of Shaping Wealth, and co-editor with Josh Brown of the new book, How I Invest My Money. Prior to speaking with Portnoy, the hosts discuss an historic month for equity markets - the S&P posting its best November ever, the Dow posting its best month since 1987, and the Russell 2000 outperforming them both. They remind that while the headlines about growing Covid-19 cases, hospitalizations, and related shutdowns look grim, markets look ahead and - thanks to what appears to be outstanding news on vaccines - are pricing in a better world six-twelve months down the road. And don't forget the election. Markets really appear to be liking the prospects for divided government and - contrary to some pre-election worries - Biden's early cabinet picks show someone who is set on governing roughly from the center. How I Invest My Money explores the investment choices of 25 prominent finance players. The common theme across this spectrum of experts: There is none, says Portnoy, other than the maxim that personal finance is more personal than finance. Even in this age of quantification and robo-advisors, says Portnoy, everyone has different goals they're optimizing, meaning investment choices will remain personal. Adding it up, nearly no one's portfolio is necessarily going to fit into the perfect efficient frontier, and there's nothing wrong with that. So many folks beat themselves up over not being fully invested in the kind of bull market we've seen over the past several months, but Portnoy reminds that we tend to undervalue the optionality and freedom of holding cash. That's not just Portnoy's belief but - in a book of 25 different professionals talking about how they invest their money - the beauty of cash is a common theme. Listen to or subscribe to Alpha Trader on these podcast platforms: Apple Podcasts Spotify Google Play Stitcher Learn more about your ad choices. Visit megaphone.fm/adchoices
41 min
Be Wealthy & Smart
Be Wealthy & Smart
Linda P. Jones
Are Digital Currencies About to Go Mainstream?
Learn why digital currencies may be about to be legislated and accepted and used by the mainstream. Central bank digital currencies (CBDCs) are going to be used as digital currencies and institutional investors are getting invested in this asset class. Are you investing well for financial freedom...or not? As we live our lives, we have seen enormous money be made in real estate, technology stocks, etc. and have seen wild swings in markets before. They can feel scary at the time, but in hindsight are often tremendous opportunities for future financial success. If you only knew where to invest for the long-term, what a difference it would make, because the difference between investing $100k and earning 2% or 10% on your money over 30 years, is the difference between it growing to $181,136 or $1,744,940, an increase of over $1.5 million dollars. Your compounding rate, and how well you invest, matters! INTERESTED IN THE BE WEALTHY & SMART VIP EXPERIENCE? -Asset allocation model with ticker symbols and % to invest -Monthly investing webinars with Linda -Private Facebook group with daily insights -Weekly stock market commentary email -Lifetime access -US and foreign investors, no minimum $ amount required Extending the Black Friday week offer, enjoy a 50% savings on the VIP Experience. More information is here or have a complimentary consultation with Linda to answer your questions. For an appointment to talk, click here: https://2909395.survey.fm/application-for-vip-experience PLEASE REVIEW THE SHOW ON ITUNES If you enjoyed this episode, please subscribe and leave a review. I love hearing from you! I so appreciate it! SUBSCRIBE TO BE WEALTHY & SMART Click Here to Subscribe Via iTunes Click Here to Subscribe Via Stitcher on an Android Device Click Here to Subscribe Via RSS Feed WEALTH HEIRESS TV Please subscribe to Wealth Heiress TV YouTube channel (it’s not just for women, it’s for men too!), here. PLEASE LEAVE A BOOK REVIEW Leave a book review on Amazon here. Get my book, “You’re Already a Wealth Heiress, Now Think and Act Like One: 6 Practical Steps to Make It a Reality Now!” Men love it too! After all, you are Wealth Heirs. :) Available for purchase on Amazon. International buyers (if you live outside of the US) get my book here. WANT MORE FROM LINDA? Check out her programs. Join her on Instagram. WEALTH LIBRARY OF PODCASTS Listen to the full wealth library of podcasts from the beginning. Use the search bar in the upper right corner of the page to search topics. TODAY'S SPONSOR I want to take a few seconds to tell you about how I “read” more books and stay ahead of the curve. It’s by not reading books, but instead listening to them – like you are right now! With Audible, there are over 150,000 titles to choose from for your iPhone, Android, Kindle or mp3 player and…your first audiobook is FREE! I suggest you get the audio book of Think and Grow Rich, or you can check out my website Resources page where I list all of my favorite financial books and you see exactly what books I have read and recommend you read. Then get started with Audible by visiting https://lindapjones.com/FreeBook and order your first audio book free! Get Think and Grow Rich or another book from my recommend list, and be sure to get started checking off the books you want to read with your free book from Audible! Be Wealthy & Smart,™ is a personal finance show with self-made millionaire Linda P. Jones, America’s Wealth Mentor.™ Learn simple steps that make a big difference to your financial freedom. (Some links are affiliate links. There is no additional cost to you.)
24 min
More episodes
Search
Clear search
Close search
Google apps
Main menu