When James Montier was hired at, GMO, co-founder and chief strategist Jeremy Grantham told him to “pound the table” when he believes “things get cheap” or any time an opportunity arises.
“Pounding the table” is just what Montier has been doing recently. A member of GMO’s asset allocation team, Montier he has used the 35% sell off last month to urge purchases of cheap equities. He observes that “Emerging markets were looking really, really cheap” and “Europe was looking pretty damned exciting as well.” The reason for his enthusiasm was valuation: “This was one of those examples where prices and fundamentals were getting dislocated.”
Part of our discussion included the impact of fear on investing. Montier mentions a study of people with damage to their amygdala. This led these people to actually make better risk-based decisions, that were free from emotions and fear. He penned a piece on this, called, “Fear and the Psychology of Bear Markets.”