Mommy! He scares me!
P!
Ping.
In our US debt regime heading toward repudiations of debt (”haircuts,” whatever), bonds are like zombies, too, by the way: walking dead.
A bold statement considering the last time it was issued: 1981 cover of Business Week Magazine.
Back then, we had very high interest rates; a viable alternative.
Now there's no return on cash.
But there's always something going up, gold, gas, tech stocks, health care services, oil field services etc.
Find one going up and ride it.
He’s just annoyed that the Fed hasn’t injected another dose of counterfeit money into the markets. That’s all that’s kept them rising for years, now.
Yeah right Bill.
How’s that Dow 5000 prediction working out for you? The Dow is up almost 100% since March 2009 when you made that prediction. I’ve worked in this business a long time; better you stick to the predictions in your specialty, bonds. I could even say this prediction of yours is pretty self-serving. The more you trash equities the more fees you collect on your own managed funds.
whole lotta confiscatin' goin' on!
Mommy! He scares me!
“The 6.6% real return belied a commonsensical flaw much like that of a chain letter or yes — a Ponzi scheme. If wealth or real GDP was only being created at an annual rate of 3.5% over the same period of time, then somehow stockholders must be skimming 3% off the top each and every year. If an economy’s GDP could only provide 3.5% more goods and services per year, then how could one segment (stockholders) so consistently profit at the expense of the others (lenders, laborers and government)?”I know he's a smart fellow but I don't think he understands wealth creation. I think he's an economic Malthusian.
Could be wrong, admittedly.
But there's no way someone could be that transparent about it, right?
Gross has done a good job running PIMCO funds but he is a bond guy and even then his prediction 1 1/2 years ago was dead wrong when he said the bond market was going to falter and he unloaded long term bonds from all his funds. He missed the big bond market move upwards, admitted he was wrong and went back into long term bonds. I think he is half right this time. Equities in the West especially Western Europe will not keep pace with the emerging market countries as Western wealth continues to move into these emerging nations. You have to be cautious going forward in which international equity markets you invest in.
Bernanke himself said the Dow would be at 6,000 now if it wasn't for Fed pumping. One big, dangerous, house of cards.
Finally, when a guy like Bill Gross says "equities are dead", he doesn't mean a stock market crash. He means don't count on a 6.6% rate of return any more.
The "uncertainty of riches" lets you down in the end. Maybe you have to be really, really lousy with riches, like me, to find an oasis in this verse. But I think any of the worries we have in this world are swept aside with "but on God, who richly supplies". I need GOD, and HE is there for me (and you)!
For equities, it all depends upon the price. When the price is right, when stock-performance lassitude combined with still-growing earnings makes the discount steep enough to provide traction for a new long-term bull market, equities will come alive again.
That said, Gross is making his comments when the S&P is close to a four-year high. The averages have been in a very long term range since 2000. Unless anyone here has some good reason to expect kick-start growth in corporate profits, they should consider that 12-year range. Suffice it to say, the S&P looks toppy right now.
Sure, Gross' remarks are a lot like the Mathusian malaise talk that was last popular in the '70s. But if he were the stereotypical foot-in-mouth boy that some seem to think he is, he'd be bemoaning the stock market at the lower end of the 12-year range (like he did in '09.) In the shorter term, his timing may be pretty good. And, sad to say, the "new normal" phase is still in place - and may be for several more years. The last range-bound market lasted from '66 to '82: sixteen years.
[And we all know who got elected President in '80. Suffice it to say, his likesake ain't on the ticket in '12.]