Zacks_Analysts' Blog : Other Voices - Grantham & 2 Hamiltons - Analyst Blog

In a continuing effort to provide words of wisdom from beyond the walls of Zacks, here are a few things that I think people should find interesting. The views expressed in the articles are not always shared by either myself or Zacks, but I do find them thought-provoking. Because the first linked post is very lengthy, I have only included three posts in Today’s “Other Voices."



Time to Wake Up



In a long but very insightful article, Jeremy Grantham of Grantham Mayo van Otterloo (GMO), a very successful money management firm, argues that the world is at one of the great inflection points in all of world economic history. We are at the point where the predictions of Malthus, made in 1798, are on the verge of coming true. The high and rising commodity prices of the last decade are not a bubble or an aberration, but the start of a new, permanent or effectively permanent trend.



The implications if he is right are dire, and I suspect he is more right than wrong. Geometric growth cannot exist forever with finite resources. From an investment point of view it argues that you want to be overweighted in commodity type stocks (including energy) and this is not just a short-term tactical allocation, but a long-term strategic one. I highly recommend reading this completely and saving it to re-read again in the future.



Saudi Oil & The Libyan Conflict



James Hamilton, a professor of Economics at UC San Diego suggests that the failure of the Saudis to raise production in response to the Libyan crisis (they actually cut production sharply in March relative to February) throws significant doubt on the actual availability of the claimed excess capacity. A case study of what Grantham is talking about?



What Would Hamilton Do?



Speaking of Hamilton, Keith Silber, the senior editor at Research Magazine creates an imaginary interview with Alexander Hamilton, the first and arguably best Secretary of the Treasury on how he would handle current economic issues. Hamilton’s “responses" are actual quotes, which may or may not be in context. While Hamilton’s late 18th century language may seem archaic, he makes a lot of points which are still valid today. Useful insights from the most economically sophisticated of the Founding Fathers.Zacks Investment Research