‘The Making of a Permabear’ Review: Investing as a Proud Pessimist

Buy low, sell high, get rich. Jeremy Grantham’s Wall Street career exactly conforms to this charmed sequence, but with what troubles along the way. The reader, at least, will be glad for them. They constitute the breath and the life of “The Making of a Permabear,” a memoir written with the financial journalist Edward Chancellor.

Mr. Grantham, a co-founder and longtime investment strategist at the Boston-based money-management firm GMO, can be said to have dug the ruts and potholes on his own bumpy road. He is a nonconformist. Worse, in the context of today’s flyaway stock market, he is a principled, value-minded, dogmatic nonconformist. He has nailed his colors to the mast of investment value (don’t overpay for stocks and bonds) and to the idea that profit margins and equity valuations never stray far from their respective long-term averages. He lays down the rule that “capital moves toward profits: excess returns attract competition and bad returns drive capital away. Pretty soon you have mean reversion.” Who can disagree?