UK - The current bear market is likely to last until 2005 at least, one of the US’s most prominent investment strategists told pension fund managers and their advisers today.

Jeremy Grantham, chairman of Boston based GMO, warned the managers and advisers at an investment seminar in London that “great bear markets take their time and it’s highly unlikely that this one is over”.

He suggested that it would be take at least five years before price/earnings ratios and profit margins reached their lows.

Grantham has built a reputation as a contrarian who predicted and publicly warned in 1999 that the technology, media and telecommunication boom was a bubble that would burst in 2000. He said that investment managers could have easily spotted the danger signs. “If you didn’t see it you weren’t looking, and if you didn’t act on it you were chicken,” he said.

However, he believes there is still money to be made in equities. “There is one terrific bet left - the US equity market versus non-US equities,” he said. “Foreign markets have in general declined more than the US and they have gone up less. They are simply much cheaper.

“More importantly, the highest quality bet is the spread between them. On a seven-year horizon the probability of non-US equities not winning are very slim indeed, and the kind of magnitude by which they can win is very significant – between 30% and 50%”

He also backed managed timber as an asset class: “In competent hands, this is the only really high quality low risk but high return asset class in existence,” he said.