Having said all that, Gross is just following the rules. If you look at what's going on, preservation of capital is the first rule. We are printing money to pay debts,....always bad for bonds. We have world troubles,.......pretty much bad for bonds if it is inflationary.( like food and fuel). No agreement possible in Washington,...a 4.7 billion cut in the deficit,......get real. Even $60 billion from Republicans,....Not even a nibble on $14 trillion. There just isn't much good news or relief for the US debt. If you look at it just right, the bad economy and high unemployment is the only reason interest rates aren't 10% already. Gross may be anticipating a better economy coming and wants to swap directions.( I don't know if he shorts bonds or buys puts, maybe he is a one way investor). I would be interested if he has shorts or some other hedge in place of the longs he sold.
If you buy into the sour predictions, the best thing to do would be to ladder into some TBT. You can either buy or sell calls or buy the ETF outright. The TBT is an inverse bond ETF.
To play this option, I might buy some leaps out of the money and see if we start to have rising interest rates. If it moves 10%, buy a few more or move the strike price accordingly. If everything works out, you can bail out before you go to zero and you are levered so you don't have all your money tied up.
Now many here probably would say "I don't want to play when Wall Street is on fire and people are jumping out of windows", but if it gets bad enough that you have to kill rabbits to eat, your money won't be worth much anyway. We are talking about the total destruction of the current regime and America will be gone beyond repair. When we go bankrupt, contracts will be void and money will be re issued. Think of how it was in wars like in Viet Nam when they would issue new money bills and trash the old to thwart counterfeiting. The old dollar would be destroyed and a new one would be issued.
What we are doing is printing money to survive till 2012 and we get a new president and a new Senate. Listen carefully right now, pay attention,.......If we don't get a new prez and Senate, we are DONE! There is NO WAY we can fix the problems we have if we kick the can one more time. It will be VERY difficult even if we do change the government. We have spent so much money and have so mush debt, we will have to live frugally for decades and somehow raise our growth rate, an almost impossible feat with Americans used to sitting on their asses and watching TV while texting. We just don't work like we used to when I was growing up. I've been an optimist most of my life, but right now, I just don't hold much hope for the greatest system the world has ever seen. We have allowed too many idiots to enact too many idiotic laws to recover, IMHO. If we can't even agree to cut $60 billion in a $4 trillion budget, there isn't much hope. The killing part is most of the Dems will still get re elected. There are too many people that believe Obama has a "stash" of money to hand out. Try to imagine a $10 cut in Social Security to save the country. The politicians would be run out of town. If we won't even do that, there is no hope.
Gross has sold off before.
Ichan is an unethical man...but unlike his peers of the day he did actually manage a business he got stuck with ..TWA...and we know how that went.
You don't have to be rich to be smart about our economy. It is certainly an inexact science even for “smart and rich” folks.
I am not rich. If I was worth what I owed I might be at the threshold of independently wealthy. My wife and kids can enjoy that after I'm planted.
btw..Treasuries went up a hair when after Gross sold off..so go figure
Inflation worries me but more due to oil prices right now and the fact that one day when we do "recover" it will be inflationary...there is no way around it and owning sizable commerical properties...moderately sizable...I ain't Duke Realty or anything...but it is a gnawing fear for me when my numerous ballons come due...where will rates be? ...they are pretty low now...I think we will reel in our debt in time but it will take more GOP control...we already have that locally and it will come nationally next year...and we will thwart the entitled...I never knew the total scope these public unions have...I'm in the South...few Unions and right to work
I have never seen as many white liberals as I do on TV in Wisconsin and all these Unions up north. We had a Union rally and they bused in around 300 to Nashville a few weeks ago. New Orleans was the only Union hotbed in the South until Katrina