Watch: Bill Gross Doesn’t Like Stocks or Bonds!
Trouble viewing video? Click here. Bond King Bill Gross “Doesn’t Like” Stocks or BONDS. Bonds! This is the former head of Pimco, where he managed the largest Bond fund to the tune of oh… $270 billion. After all, the man’s nickname literally is “The Bond King”. So what does he like?
Bill Gross: “I don’t like stocks, I don’t like bonds, I don’t like private equity…real assets such as land, gold…are favored asset categories.”
Yesterday in his August letter to investors, Bill Gross, portfolio manager at Janus Capital, issued a warning against investing in stocks and bonds and advised investors to move into gold, land and other real assets.
The reason for his dour prediction is central banks’ monetary policies of low and negative interest rates and other foreboding signs of a weakening financial system. Low interest rates raise asset prices, but impede savings and business investment. He also stated that capitalism cannot function properly with interest rates at zero and negatives, and that global monetary policies will not succeed without nominal growth, which we are not seeing.
What this means for investors: In times of market turbulence and volatility, gold becomes a more attractive investment. Demand increases, as investors become more risk adverse. Economic growth around the globe is slowing due to central banking stimulus policy, and without growth, high yields on stocks and bonds will become more difficult to find. Gold both preserves wealth during economic downturn and offers a return. The metal is up 26% for the year with many strategists projecting it to climb as high as $1400 by the end of the year.
Who is Bill Gross?
William “Bill” Gross is the founder and former Bond Manager of PIMCO, where he managed as much as $293 billion in assets. His understanding of the bond markets earned him the nickname “The Bond King”. In 2014, After 43 years, Gross left PIMCO to join Janus Capital Group, where he currently manages the $1.5 billion Janus Global Unrestrained Bond fund, which is up 3.93% for the year. He has also written acclaimed books on investing, “Everything You’ve Heard About Investing is Wrong” and “Bill Gross on Investing“. Gross is the latest to join the swelling ranks of fund managers and investors who have gone bullish on gold. Stanley Druckenmiller, Paul Singer, Jeff Gundlach, and George Soros are just some of the other prominent names that have recently recommended gold to investors and cautioned against stocks in the current economic climate.
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