More on the coming rotation out of DM and into EM

Since everyone is talking about the anniversary of the Lehman collapse and the financial crisis, now's a good time to think about the upside after crisis. In February 2009, I wrote a post based on some advice from veteran investor Jeremy Grantham. It was pretty short, but here is the key kernel of his advice:
“When the market goes down, it reinforces the hoarding of cash. By the bottom, you suffer what we called in 1974 terminal paralysis — you cannot pull the trigger. Almost everyone who avoids the great pain is very slow to get back.”
The way I interpret his remarks are as a call to buck the gloomy consensus when the pain is reaching its worst. That way you are more likely to buy at the bottom than at the top. People probably thought he was insane at the time.

Timing wise, this was a co...

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