‘Scared For the Market,’ GMO Cuts Equity Exposure Near a Third
‘Scared For the Market,’ GMO Cuts Equity Exposure Near a Third
(Bloomberg) --
Investors across Wall Street are beginning to wonder if the risk rebound has further room to run. Fed policy is extremely stimulative, economies are reopening, and slices of the market hit hard by Covid-19 are joining in on the rally. But GMO, the famous money manager founded by Jeremy Grantham, isn’t buying it.
Instead, the firm just reduced its net equity exposure for benchmark-free strategies by 30% to protect portfolios against the threat of large stock drawdowns. Ben Inker, head of asset allocation at GMO, joins the “What Goes Up” podcast to explain why.
An excerpt from the show:
“I haven’t heard anybody saying, ‘You know what? I’m buying Google today because I think it’s going to give me 2% real, and in this world I’m fine with 2% real.' If we were getting that, I would be a little bit less scared for the market than if people are saying, `Well with the Fed here the market can’t help but go up, so all I care about is the short-term.’''
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