What does one do with cash during this time of unprecedented illiquidity? In this article, Jeremy Grantham offers some advice to investors who may be in danger of falling prey to the “terminal paralysis” that often sets inafter a financial crisis. Grantham co-founded Boston-based GMO, an investment house overseeing $126 billion in assets,in 1977.

“For the record, we now believe the S&P is worth 900 at fair value or 30% above today’s price. Global equities are even cheaper. … our guess is that there is still a 50/50 chance of crossing 600 on the S&P 500,” said Grantham.

” … be aware that the market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.”

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Source: Jeremy Grantham, GMO, March 10, 2008.

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