James Montier is a member of the asset allocation team at GMO UK Ltd. Previously, he was co-head of global strategy at Société Générale S.A. and a global equity strategist at Dresdner Kleinwort. Mr. Montier is the author of several books, including Behavioural Investing, Value Investing, and Behavioural Finance. He is a visiting fellow at Durham University and a fellow of the Royal Society of Arts. Mr. Montier holds a BA in economics from the University of Portsmouth and an MSc in economics from the University of Warwick.
He gave a useful presentation at the CFA Institute’s Annual Conference this week where he systematically reveals the dangerous nonsense underpinning modern portfolio theory so widely followed in finance today.
Here is a direct link to the clip. You will need to advance the play bar to 18:40 to where Montier is introduced.
There are many gems in his talk–such a refreshing relief to hear someone call
bullshit rubbish on conventional wisdom in this area. (I gave a similar talk at the CFA Institute Conference in Atlanta in 2008. It was well received, and completely unheeded by the industry, of course.) Existing business models in the money industry are so flawed, endemic and misguided that it is very slow to evolve changes needed. And so the firms, advisors and clients will apparently keep learning hard lessons the hard way for a few more years to come.