According to GMO’s Jeremy Grantham, there’s nothing like the fear of death to stop an investment manager from becoming too complacent in an era of overall investment mediocrity.On that basis, why not think the way Stalin’s pension fund might have to?Here’s the thought experiment outlined by Grantham in his latest research note (our emphasis):Joe Stalin has appointed you to a well-paid cushy job looking after his substantial pension fund. Do well enough and you will receive Black Sea privileges, a dacha outside Moscow, and a good pension. Do badly and you will discover that Stalin has a nasty temper. In fact, you will be shot. Conveniently, Stalin, who likes precision, has defined a very precise benchmark: 4.5% real for 10 years. (He understands that 4.7% real is considered the “normal”
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According to GMO’s Jeremy Grantham, there’s nothing like the fear of death to stop an...