Jeremy Grantham: How We Made Money Despite The S&P Being Down 50%

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During this interview with David Rubenstein, Jeremy Grantham explains how he was able to make money despite the S&P being down fifty percent. Here’s an excerpt from the interview:

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Grantham: In ’98 and ’99, of course, was a glorious bubble, and it just went up and up and up. We fought the bubble all the way, so we were horrifically too early.

That was a brutal two years, and the earnings were rising as well. So the market made a magnificent move from its all-time high in early ’98, went straight up until March of 2000, and our clients did not approve of us being early. To a very considerable degree, they fired us.

People pulled money out, and then when the market finally did have its collapse, the so-called dot-com bubble burst, did people call you up and say, ‘We’re sorry, can we give you our money now?’

Not a single solitary person who fired us came back for the same product they fired us for. Personnel changed, and they inadvertently came back years later, but no one came back.

We didn’t lose money in 2000; we didn’t lose money in 2001, and we did not, by the skin of our teeth, lose money in 2002. So by the time the S&P was down 50 percent, we had had three up years.”

You can watch the entire discussion here:

Article by The Acquirer’s Multiple.

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Tobias Carlisle is the founder of The Acquirer’s Multiple®. He is also the founder of Acquirers Funds®. The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates.