Grantham: Be In Cash, Wait for Stocks to Fall

Posted by Ian Cooper - Thursday, November 11th, 2010

From CNBC:

"Investors should be mostly in cash, which gives them security as well as the option to take advantage of other investments if prices fall, fund manager Jeremy Grantham told CNBC Thursday.

“Cash has a virtue that people don’t appreciate fully, and that is its 'optionality,' ” said Grantham, who is chief investment strategist of Grantham Mayo Van Otterloo, a Boston-based asset management firm, and a respected voice in the financial world.

 “If anything crashes and burns in value—say the US stock market—if you have no resources, it doesn’t help you," he explained. "If the bond market crashes, and you have not resources, it doesn’t help you. What cash is is an available resource." (Watch video of Maria Bartiromo's entire interview with Grantham below.)

 Grantham thinks stocks are overpriced, so being in cash now gives investors the chance to enter the market later.

“It buys you the right to buy the US market if the S&P drops from 1,220 today to 900, which is what we think is fair.”

Grantham also recommended buying a few shares of..."

Read more here.


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