But if you read in between the lines of his latest newsletter, he seems to be changing his mind.
Back in late 2010 Grantham insisted that Australians were spending too much on housing, with property prices overvalued by 42% in his estimate.
He said that in our major capital cities, such as Melbourne and Sydney, house prices have doubled in eight years and quadrupled in 21 years.
According to Grantham, this type of rapid rise in values was creating a price bubble that was set to deflate significantly in the near future.
Of course his predictions didn’t come to pass and there are signs that our property markets are turning the corner.
In a recent newsletter Grantham offered 10 investment tips and urged investors to contain their natural optimism.
“Our species is optimistic, and successful people are probably more optimistic than average.
“Some societies are also more optimistic than others: the U.S. and Australia are my two picks.
“I’m sure (but I’m glad I don’t have to prove it) that it has a lot to do with their economic success.
“The U.S. in particular encourages risk-taking: failed entrepreneurs are valued, not shunned,” he writes.
“While 800 internet start-ups in the US rather than Germany’s more modest 80 are likely to lose a lot more money, a few of those 800 turn out to be today’s Amazons and Facebooks.
“You don’t have to be better; the laws of averages will look after it for you.
“But optimism comes with a downside, especially for investors: optimists don’t like to hear bad news,” he adds.
“And in a real stock bubble like that of 2000, bearish news in the US will be greeted like news of the bubonic plague; bearish professionals will be fired just to avoid the dissonance of hearing the bear case, and this is an example where the better the case is made, the more unpleasantness it will elicit.
“Here again it is easier for an individual to stay cool than it is for a professional who is surrounded by hot news all day long (and sometimes irate clients, too). Not easy, but easier.”
His top 10 investment advice slogans are:
1. Believe in history
2. Neither a lender nor a borrower be
3. Don’t put all of your treasure in one boat
4. Be patient and focus on the long term
5. Recognize your advantages over the professionals
6. Try to contain natural optimism
7. But on rare occasions, try hard to be brave
8. Resist the crowd: cherish numbers only
9. In the end it’s quite simple. Really
10. This above all: to thine own self be true
Source: Property Observer
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