In simple terms, this statement suggests that merely taking risks does not guarantee a financial reward. Instead, rewards are tied to acquiring assets at low prices. If risky investments become more expensive simply because they carry higher risk, then those who buy them will likely face losses rather than gains.
The deeper meaning of this quote underscores the importance of value investing over speculative investment strategies. Jeremy Grantham emphasizes that true returns come from identifying undervalued assets and buying them before the market recognizes their worth. When investors focus solely on risk and overlook fundamental asset values, they miss out on opportunities to profit from genuine bargains. This perspective challenges conventional wisdom that equates high risk with high reward, advocating instead for a careful analysis of an investment's intrinsic value.
Jeremy Grantham is a renowned investor and co-founder of GMO, an asset management firm based in Massachusetts. Known for his contrarian views and long-term market forecasts, he has built a reputation as one of the most insightful voices in finance. His insights often emphasize the importance of patience and rigorous analysis over speculative or short-term trading strategies.
