Book Review: The Making of a Permabear: The Perils of Long-term Investing in a Short-term World by Jeremy Grantham with Edward Chancellor
Introduction
Jeremy Grantham, the legendary value investor and co-founder of GMO (Grantham, Mayo, van Otterloo), known for prescient calls on bubbles from Japan 1989 to the dot-com crash and 2008 financial crisis, offers his long-awaited memoir in The Making of a Permabear (2026). Co-written with financial historian Edward Chancellor (author of Devil Take the Hindmost), the ~400-page hardcover (Atlantic Monthly Press) spans six decades of Grantham’s career. The title embraces his “permabear” label—a perpetual pessimist who warns of overvaluation—while exploring why long-term, disciplined investing struggles in a short-term, momentum-driven world. Released just days ago in January 2026, it’s already a top new release in investing, praised for candid insights, wit, and a front-row tour of market history. In an era of AI hype, meme stocks, and record valuations, Grantham’s contrarian voice feels urgent and contrarian as ever.
Content and StructureThe book blends autobiography, investment philosophy, and market history. It opens with Grantham’s Quaker Yorkshire roots—thrifty values and independence—then traces his entry into finance in the 1960s.Key sections cover:
- Early career: Working at Batterymarch Financial, spotting inefficiencies, and developing value-oriented strategies amid the go-go 1960s and Nifty Fifty bubble.
- Founding GMO: Building a firm focused on asset allocation, emerging markets, and bubble detection. Grantham recounts near-misses (nearly losing it all in early bets) and triumphs (sidestepping crashes).
- Major calls: Detailed accounts of warning on Japan (1989), tech (1999–2000), housing (2005–2007), and later excesses. He reflects on being “early” and the psychological toll of contrarianism.
- Philosophy: Chapters explore why markets overshoot (behavioral biases, short-term incentives), the perils of long-term patience in quarterly-driven finance, and Grantham’s evolving views on resource limits, climate, and super-bubbles.
- Personal anecdotes: Witty stories of Wall Street quirks, colleague dynamics, and humility in being wrong (or right too soon).
The narrative is chronological yet thematic, rich with data, charts (in print), and Chancellor’s historical framing. The tone is candid, self-deprecating, and witty—Grantham owns failures without ego.
Key Themes and Takeaways
Core tension: Long-term value investing vs. short-term speculation. Grantham argues markets reward momentum over fundamentals, punishing patient investors with years of underperformance. Themes include behavioral finance (greed, fear, herd mentality), bubble psychology, the cost of being contrarian (career risk, isolation), and realism about resource scarcity and mean reversion. He defends “permabear” as prudent realism, not nihilism—advocating discipline, diversification, and skepticism of euphoria.
Strengths and Criticisms
Strengths: Grantham’s insider perspective delivers fresh, entertaining history—WSJ calls it “smart and accessible.” Chancellor’s collaboration adds polish and depth. It’s insightful for investors, blending memoir with timeless lessons.Criticisms: Some may find it bearish-heavy (Grantham admits his bias), with less on recent successes. The focus on past bubbles could feel retrospective to critics of his calls.
Conclusion
The Making of a Permabear is a masterful, witty memoir from one of investing’s sharpest minds—equal parts cautionary tale, history lesson, and defense of patience in a frantic world. Essential for value investors, bubble-watchers, or anyone navigating high-valuation markets. Rated 4.7/5 for candor, wisdom, and readability. In 2026’s frothy environment, Grantham reminds us: being early isn’t wrong—it’s just lonely.