Tags: grantham | blue | chip | dow

Grantham: Blue Chip Stocks Now Best Values

Thursday, 30 Jul 2009 12:50 PM

By Marc Davis

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Shares in America's corporate giants are looking good — some of them, anyway.

So says Jeremy Grantham, chief investment strategist of Grantham Mayo Van Otterloo & Co., an investment management firm with headquarters in Boston. The company has $78 billion in its portfolio.

"The easy winner of the cheapest equity subcategory contest is still high-quality U.S. blue chips," Grantham said in his quarterly newsletter, published on the firm's Web site.

"They were really trashed on a relative basis by the second quarter rally in junk," he wrote, according to Bloomberg News.

Grantham did not cite the companies he believes are the "best values." During the same period, the MSCI Emerging Markets Index soared by 34 percent, so Grantham believes these equities are now "modestly overpriced."

GMO's Edward Chancellor, part of the firm's asset allocation brain trust, "strongly suspects that the Chinese economy is dangerously unbalanced and very likely to come unhinged in the next few quarters, surprising the pants off investors," Grantham warned in his newsletter.

Grantham is in good company with his bullish outlook on the Dow.

Warren Buffett sees things, as of now, the same way.

“I would much rather own equities at 9,000 on the Dow than have a long investment in government bonds or a continuously rolling investment in short-term money,” Buffett told CNBC in a recent interview.

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