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Read This Research and Make a New Fortune Every Decade

By Tom Dyson, publisher, The Palm Beach Letter
Monday, March 8, 2010

If you'd have put your savings with money manager Jeremy Grantham in 1985, you would have multiplied your money 13 times and beaten 99% of other investors.

Grantham is the chief investment strategist for a giant asset management business named GMO, which manages around $100 billion. He cofounded GMO in 1977... and he's made billions for his investors. His core mutual fund has returned almost 11% a year since 1985, trouncing the S&P 500.

But to make a even more money from Grantham, don't invest in his mutual fund. Read his quarterly investment updates instead...

If you did nothing else but follow the predictions in Grantham's reports, you'd make a new fortune every decade...

Grantham's investment reports are the clearest, no-nonsense appraisals of the investment markets you'll find anywhere. They are free and available to the public. And the long-term predictions Grantham makes are legendary in their accuracy.

Take the predictions he made 10 years ago, in a report published in July 2000...

Grantham predicted large-cap American stocks and tech stocks would be the worst performers. Specifically, he said the S&P would decline 1.8% a year on average for a decade... and be a worse investment than cash.

"We've just experienced the greatest bull market in American history," said Grantham. "I'm sure it's going to be followed by the usual consequences."

If you had shorted the stock market the day you read this report, you could have made a fortune over the next three years as the technology bubble popped and America fell into recession.

Then Grantham advised his readers to buy real estate investment trusts (REITs). REITs are stock market vehicles for buying real estate. Grantham showed that despite the biggest bull market in America's history, REITs were trading at a 25% discount to physical real estate, while physical real estate was trading at fair value.

"The REITs are cheap – really, seriously, absolutely cheap," he said. "There are no cranes all over America. The market's in a sweet spot. The bankers aren't lending ridiculously. Real estate is a good solid asset with a good solid return."

If you'd followed Grantham's advice then, you would have caught the full real estate boom. Between 1999 and 2007, the benchmark FTSE NAREIT index rose 244%.

Grantham did it again in 2007. "It's bubbly time!" he said in his April 2007 report. "The busting of the bubble will be across all countries, and all assets with the probable exception of high grade bonds."

In early 2009, at the bottom of the credit crunch, Grantham declared the market was finally "cheap" and said market returns over the next seven years would be "much above the average of the last 15 years." So far, he's right again.

So what's Grantham saying right now?

Grantham published his forecasts for the next seven years in his most recent letter. (You can read it here, along with all Grantham's archived letters.)
 
Grantham likes emerging-market stocks and bonds, but his favorite investments are high-quality U.S. stocks. These are the stocks with the most dependable businesses, the longest track records, the most cash, and the strongest brand names.

The five biggest positions in Grantham's fund right now are Wal-Mart, Microsoft, Google, ExxonMobil, and Pfizer.

Good investing,

Tom

P.S. These are great stocks, but you shouldn't buy them through your broker. The U.S. postal service offers a much better deal that saves you money and improves long-term returns. It's the most efficient way to own stocks like Exxon and Microsoft... Click here for the details.




Further Reading:

As Tom writes, Steve's got a whole different take on where we're heading... You can find his argument – and a great chart of the indicator he's watching – here: The Recession Is Most Certainly Over.
 
Tom's keeping a close eye out for other assets that will appreciate both in a recession and in a boom. Get another of his "heads you win, tails you win" investments here: How to "Bank" Dividends Whether or Not the Economy Recovers.

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
The American way of life is back!
Apple (AAPL)... iPhones and iPods
Altria (MO)... cigarettes
Boston Beer (SAM)... beer
Sara Lee (SLE)... junk food
Domino's Pizza (DPZ)... pizza
Chipotle (CMD)... huge burritos
Panera Bread (PNRA)... huge sandwiches
Cheesecake Factor (CAKE)... huge salads
Dr. Pepper Snapple (DPS)... pure sugar
Nordstrom (JWN)... $100 shirts
Hershey (HSY)... chocolate
Equity Residential (EQR)... leveraged real estate
L-3 Communications (LLL)... Big Defense
Northrop Grumman (NOC)... Big Defense
Rockwell Collins (ROC)... Big Defense
Boeing (BA)... aerospace & Big Defense
Radio Shack (RSH)... electronics
Williams-Sonoma (WSM)... home furnishings
Home Depot (HD)... home improvement
Target (TGT)... upscale Wal-Mart
Sotheby's (BID)... auctions
Rowan (RDC)... oil services
BJ Services (BJS)... oil services
Baker Hughes (BHI)... oil services
Celgene (CELG)... biotech
Intuitive Surgical (ISRG)... robotic surgery

NEW LOWS OF NOTE LAST WEEK

In The Daily Crux



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