Robert Jeremy Goltho Grantham is a British investor and co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo, a Boston-based asset management firm. GMO has more than US$118 billion in assets under management as of March 2015. Grantham is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles. He has been a vocal critic of various governmental responses to the Global Financial Crisis from 2007 to 2010. Grantham started one of the world's first index funds in the early 1970s. In 2011 he was included in the 50 Most Influential ranking of Bloomberg Markets magazine.
Grantham's investment philosophy can be summarised by his commonly used phrase "reversion to the mean." Essentially, he believes that all asset classes and markets will revert to mean historical levels from highs and lows. His firm seeks to understand historical changes in markets and predict results for seven years into the future. When there is deviation from historical means, the firm may take an investment position based on a return to the mean. The firm allocates assets based on internal predictions of market direction.
Views on market bubbles and the 2007–2008 credit crisis
Grantham has built much of his investing reputation over his long career by claiming to identify speculative market "bubbles" as they were unfolding. Grantham claims to have mostly avoided investing in Japanese equities and real estate in the late eighties, as well as technology stocks during the Internet bubble in the late nineties. In GMO's April 2010 Quarterly Letter Grantham spoke to the tendency for all bubbles to revert to the mean saying: In his Fall 2008 GMO letter, Grantham commented on his evaluation of the underlying causes of the then-ongoing world credit crisis Grantham focused on the issue of personal traits and leadership in trying to explain how we reached the current economic crisis.
Grantham has repeatedly stated his opinion that the rising cost of energy – the most fundamental commodity – between 2002 and 2008 has falsely inflated economic growth and GDP figures worldwide and that we have been in a "carbon bubble" for approximately the last 250 years in which energy was very cheap. He believes that this bubble is coming to an end. He has stated his opposition to the Keystone Pipeline on the basis of the ruinous environmental consequences that its construction will bring to Alberta and to the entire planet due to the contribution that burning the extracted oil would make to climate change.
Timber investment
Grantham is known to be a strong advocate for investments in the timber industry that also relies on trees for biomass/biofuel. The potential conflict of interest with Grantham's philantropic engagement for the "beyond coal" campaign of the Sierra Club was criticized in Jeff Gibbs' documentary Planet of the Humans.
Philanthropy
Grantham, together with his wife Hannelore, established the Grantham Foundation For the Protection of the Environment in 1997. Substantial commitments have been made to Imperial College London, the London School of Economics and the University of Sheffield, to establish the Grantham Institute - Climate Change and Environment, the Grantham Research Institute on Climate Change and the Environment and the , respectively, which will enable the institutions to build on their extensive expertise in climate change research. The 2011 tax filing for the Grantham Foundation for the Protection of the Environment shows the Foundation donated $1 million to both the Sierra Club and to Nature Conservancy, and $2 million to the Environmental Defense Fund that year. The Foundation has also provided support to Greenpeace, the WWF, Rare and the Smithsonian. From 2006 to 2012, The Grantham Foundation for Protection of the Environment funded a $75,000 prize for environmental reporting. The prize was administered by the University of Rhode Island's Metcalf Institute for Marine & Environmental Reporting. In August 2019, he dedicated 98% of his personal wealth to fight climate change. Grantham believes that investing in green technologies, is a profitable investment on the long run, claiming that decarbonizing the economy will be an investing bonanza for those who know it’s coming.
