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The Market Wizard

Investing guru Jeremy Grantham riffs on the stock market, the housing bubble, and why our treatment of the environment could be our riskiest bet of all. . Photograph by Steve Moors.

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All you need to know about investing legend Jeremy Grantham sits just to one side of his desk, overlooking the breezy wharves of Boston. It's a massive stone Buddha, standing about four feet high and weighing hundreds of pounds, that made it all the way here from ninth-century Java.

First, the Buddha's serene gaze implies "everything in moderation," meaning bubbles come, and bubbles go, but things always drift back to the middle. And second, Grantham, 68, got the statue for an absolute steal during the Asian currency crisis back in the late '90s, when antiquities from the region just weren't selling. "So I called up Sotheby's after the auction and made a bid far below the reserve price," he remembers. "They said, 'Yes, please!'?"

Now that's the instinct of a true value investor.

And it's the kind of attitude that has made Grantham - chairman of ­investment-management firm Grantham, Mayo, Van Otterloo & Co. (GMO) and its $121 billion in assets - the kind of money manager that other money managers listen to. Understandable, when you consider that he has popped up at the most revolutionary movements in modern investing. Investments that are indexed to track the market's performance? He was a pioneer. Small-cap investing, for people who want a piece of tiny-but-growing­ firms? His too. International investing, to take advantage of markets around the world? He was among the first. Quantitative investing, for "numbers nerds" who are able to find value in reams of company data? You get the ­picture.