Jeremy Grantham, rock star investor and co-founder of the fund management group GMO (Grantham, Mayo and van Otterloo), rocked some pumpjacks while speaking at an ESG investment conference in London and suggesting investors dump their oil stocks — or avoid them at the least. Traditional investors understandably had misgivings about the advice, given that almost every institutional and individual portfolio contains positions in oil companies.
Grantham, an environmental activist and philanthropist, challenged nervous investors by running 30-year simulations of portfolios minus stocks of various industries, then compared the portfolios’ returns with the market as a whole. The shocking result: Little difference was made. Regarding oil stocks, the S&P 500 index returned 9.71 per annum from 1989 to 2017, while the index that excluded oil stocks returned 9.74 percent. The spread between the best portfolio and the worst was a mere 0.5 percentage points.
Perhaps the past