7 Stocks for the Next 7 Years

Market guru Jeremy Grantham expects shares from high-quality companies to be top performers.

Among those few market gurus who saw the credit crisis coming, Jeremy Grantham holds a special place. For years leading up to the crisis, Grantham, who is chief investment strategist of Grantham, Mayo, Van Otterloo & Co., was routinely dismissed as a “permabear.” He had repeatedly warned investors that stocks were dangerously overpriced and that markets would inevitably correct.

Anyone can vet Grantham’s record as a seer at GMO’s Web site, thanks to the quarterly return forecasts GMO publishes. (They will show he’s not just a bear -- he published a piece that was pound-the-table bullish the day after markets bottomed in March 2009.) For example, scroll back to mid 2000, when tech stocks were still frothy and some gurus were calling for the Dow Jones industrial average to hit 36,000. You’ll see that GMO was chillingly on-target, predicting a 2% annualized loss (after inflation) for large-capitalization U.S. stocks for the next ten years. Although it hasn’t been a full ten years since the July 2000 forecast, Standard & Poor’s 500-stock index is down 1.3% annualized since then, before accounting for inflation.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.