By Dan Ferris in Extreme Value:

If you want to learn a great deal about investing in a very short period of time, go to www.gmo.com and read "Everything I know about the stock market in 30 minutes." It's a set of notes from a Jeremy Grantham presentation. It only takes a few minutes to read the whole thing, but it contains a lifetime of fantastic investing advice, including Grantham's well-known quote, "Very hard work gets in the way of thinking."

Grantham says the three biggest weaknesses of investment managers (and most investors) are:

1. A mixture of overconfidence and an overeagerness to be busy. There are, therefore, far too many decisions made.

2. A failure to differentiate between high and low confidence and therefore between major and minor bets. Managers are either risk takers or conservative. A better solution is to be conservative almost all the time, but take large risks when the fat pitch finally arrives.

3. A fixation on the short-term. This is reinforced by daily performance feedback and by a need to regularly impress clients. It also equates with high turnover. The irony is that most important factors are easier to predict long-term than short-term.

The effect of these mistakes, Grantham writes, is "high turnover, high costs and a mass of small, often offsetting bets going nowhere, yet perversely an underweighting of the few powerful ideas most managers do indeed have. Clients end up overpaying for large indexed or over-diversified components of their account."

The antidote, says Grantham, is to "Build the portfolio around a few major long-term bets... The same talent will produce more this way."

Crux note: Dan Ferris is the editor of Extreme Value. To learn his top recommendation right now – what he calls "Gold Backed Annuities" – click here.

More from Dan Ferris:

The one group of stocks you should sell immediately...

Dan Ferris on the most important investment rule for today's market

Dan Ferris: Why earnings "above analysts' expectations" are actually crap