I noticed that the indexers were out showing that index funds always beat everything else including GMO.

Indexers are forever selecting their index funds, time frames and allocations AFTER THE FACT to show that index funds are better than mutual funds.

HINT: That isn’t the way that it is supposed to be done.

Have fun.

John Walter Russell

I’ve always enjoyed reading Grantham’s letters – I wouldn’t base all my plans on them but he seems to see things in a way that few people consider. He’s been right before and his method of estimating the right long-run value for the stock market is interesting but it’s hard to tell if he’ll continue to do well in the future…

I expect Jeremy Grantham’s approach to continue to be successful. My guess is that he constructs a bottoms-up equivalent to P/E10 on particular market sectors. If so, he is on solid ground.

My logic centers around his choice of a time frame (7 years) and the range of outcomes that he calculates. All of this is consistent with P/E10 based predictions–the shortest reasonable time frame and a slightly reduced data spread from using sectors.

Have fun.

John Walter Russell