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Berkshire Hathaway Inc. Message Board

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  • jad1148 jad1148 May 23, 2004 4:36 PM Flag

    Neff's Outlook

    Hi roberts1001,

    � By the way, do you know the time frame for Grantham's efficient frontier graphs, Exhibit 5 in the article you linked? The time frame must be short, since Grantham makes a point of how the curves have flattened recently. �

    Sorry, I don't know the time period.

    Grantham's forecasts used to cover 10 year periods, but he moved to 7 years in mid 2001. I don't have a reference for you but do remember reading something to the effect that after studying historical cycles (from overvaluation to undervaluation) for many different asset classes he settled on 7 years. He rationalized 7 years by saying that 10 years muted the damage inflicted by a contracting multiple on the real total return but that annualizing the damage over five years was just too scary for his clients. I hope I got that right.


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