Hired to Pound the Table When Things Get Cheap

(Bloomberg Opinion) -- When this week's guest on Masters in Business, James Montier, was hired at GMO UK Ltd., co-founder and chief strategist Jeremy Grantham told him to "pound the table" when he believes "things get cheap."

That is just what Montier has been doing recently. A member of GMO’s asset-allocation team, Montier was arguing that it was time to buy during last month's sharp sell-off. He says that emerging markets looked cheap as did Europe. The reason for his enthusiasm was valuation: “This was one of those examples where prices and fundamentals were getting dislocated."

We also discuss the impact of fear on investing. Montier mentions a study of people with damage to the amygdala, the part of the brain that registers emotions. This led these people to make better risk-based decisions because they were free of feelings. A few weeks ago, he wrote a piece on this called "Fear and the Psychology of Bear Markets."

Before joining GMO in 2009, he was the co-head of global strategy at Societe Generale. Montier has written several books including “Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance”; “Behavioural Finance: Insights into Irrational Minds and Markets” and “The Little Book of Behavioural Investing.”

His favorite books are here; a transcript of our conversation is here.

You can stream and download our full conversation, including the podcast extras, on Apple iTunes, Spotify, Overcast, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

Next week, we speak with Christopher Whalen, an investment banker and former Federal Reserve researcher, and author of "Inflated: How Money and Debt Built the American Dream."

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

©2020 Bloomberg L.P.

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