Quality as a factor—measured by less debt, higher returns, more stability, and lower bankruptcy risk—is a genuine market inefficiency: quality stocks outperformed by roughly 0.5% per year while bonds show AAA bonds underperform B bonds by ~1% per year, creating a ~1.5% annual 'freebie' inefficiency that academics missed for decades.

factualpending

Speaker

Jeremy Grantham

Evidence Quote

quality outperformed...the AAA stock...outperformed by about half a percent a year...a freebie return and an inefficiency of about 1 and 1/2% a year

Source

Jeremy Grantham: Lessons from 60 Legendary Years of InvestingThe Master Investor Podcast with Wilfred Frost
Created: 8/12/2026, 6:39:12 PM

My Notes

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