No stock answers | The bear

A bear who sees a bright side, too

Barry Chin/Globe Staff
“We think there is money to be made,’’ said Ben Inker, head of asset allocation at the Boston investment firm GMO, which manages $93 billion.

This bear is sounding almost bullish. Almost.

Ben Inker works with the notorious pessimist Jeremy Grantham at the investment shop GMO in Boston. The firm’s almost perpetually gloomy outlook has often paid off.

But for all the dark clouds hanging over the market right now, Inker is practically sunny.


“We think there is money to be made,’’ declared Inker, head of asset allocation at GMO, which manages about $93 billion.

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Of course, he has plenty of concerns - a recession in Europe, the slowdown in China, US government bonds that are yielding too little to be worth owning.

“There’s plenty of stuff to be worried about,’’ Inker said. But “there’s actually a fair number of stocks worth owning. For us, that’s exciting.’’

This from a guy whose firm’s newsletter earlier this month called the environment “really, really scary’’ and advised clients to be cautious about stocks until October 2015.

“No market for young men,’’ they insisted.


But Inker, 41, had a more moderate view in a recent Globe interview. He said the firm’s outlook for 2012 is less about what the overall economy looks like and more about what is worth owning.

Inker likes the look of big, stable, profitable companies that do well almost no matter what the economy delivers - names such as Coca-Cola Co., Johnson & Johnson, and Microsoft Corp.

Many high-quality stocks are cheap right now, he said, and he likes those that pay dividends even more.

The broader US market is overvalued, Inker said, but, “you should not wait until the market is screamingly cheap before you put any money into it.’’

He said investors run an even greater risk by sitting entirely on the sidelines and could “miss out on perfectly good returns.’’


In this year’s volatile market, GMO’s Global Asset Allocation portfolio has returned about 1 percent, close to the 0.4 percent gain in the Standard & Poor’s 500.

Overall, GMO’s stock and bond funds had a combined average return of - 2 percent through Dec. 28, according to Morningstar Inc., a Chicago firm that tracks fund performance.

Looking ahead, Inker said, the most attractive targets are in “places where people seem to have less hope than more.’’ Europe and Japan look like bargains, he said.

Yes, he is worried about the political climate in the United States. “It seems like the government is having real trouble doing anything,’’ he said.

But the firm is not basing its investments on guesswork about what lawmakers may or may not do. What happens over the long term is of greater interest to Inker, he said, than what happens in the coming year.

Inker said he and his colleagues are actually energized in bad times.

“People assume that times will be bad forever,’’ Inker said. “And when times are good, people assume they’ll be good forever. And they are overwhelmingly wrong in both assumptions.’’

It is a bad time to own bonds, Inker said, so no sense hunkering down and avoiding stocks altogether. Better to hunt for good stocks, including in the United States, where growth is projected at a modest 2 to 3 percent.

“I’d be happy if stocks were even cheaper,’’ Inker said. “But there are a fair number of stocks around the world worth buying, in an environment where bonds are really horrible.’’

Inker seems to have an untapped well of patience, even if stocks stay in the dumps for a while. “There are worse things in the world,’’ he said.

Beth Healy can be reached at