Gross: Stock, Bond Returns Won’t Be Normal for Years By: Ellen Chang
Investors should not expect the same yields on their stock and bond portfolios for several years, said Bill Gross, the investment guru who runs the world's biggest bond fund at Pimco.
Investors should plan on receiving about half of the previous normal of 8 percent, Gross says.
"And that means, ultimately in terms of risk assets, whether it's stocks or high-yield bonds or even bonds themselves, that those types of returns will reflect a slower rate of growth," he says. "In other words, instead of 8 to 10 percent in terms of return for risk assets, you should expect 4 to 6 percent. Reduce your expectations,†he told CNBC.
Gross said investors need to get ready to receive much smaller returns from their investments.
“We should expect less as opposed to more — new normal as opposed to old normal. We should expect that the private economy is delivering on a global basis. That means consumption and household income growth will be less than it has in prior years,†he said.
Since the 10-year Treasury note is only yielding just below 4 percent, investors should expect that to be the new rate of growth, Gross said.
“A company like Pimco hopefully can produce something beyond that because that's our historical track record and that's something investors look for us to do,†he said.
Jack Bogle, founder of the Vanguard funds group, predicts the market will produce slightly better returns than Gross’ forecast.
“We ought to be able to get from these earnings levels maybe earnings growth of 6 percent and total returns from stocks a little bit over 8 percent, and I think that's a reasonable forecast," he said.
"The fundamentals of stock returns ought to be about 8 percent and 4 percent in the bond market. When you compound those numbers of 10 years, that's almost 100 percent for stocks and 50 percent for bonds. That's a big difference."
http://moneynews.com/StreetTalk/pimco-b ... /id/355278
|
|
Bill Gross
Re: Bill Gross
by winston » Tue Apr 13, 2010 8:56 pm
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Bill Gross
by winston » Thu Apr 29, 2010 9:10 pm
Gross: Real Estate Could Beat Stocks and Bonds By: Julie Crawshaw
Real estate is nearing a bottom and could eventually be a better bet for investors than stocks or bonds, says Pimco co-CEO Bill Gross.
Both commercial and residential real estate are reaching a bottoming point and possibly even prepared to turn higher, he says.
"Ultimately the riskier assets will be the less the risky assets," Gross says. "I wouldn't suggest moving into those particular sectors at the moment but ultimately risk and reward go together."
However, with stocks likely to return 5 to 6 percent and bonds 3 to 4 percent, Gross notes, investors would be wise to start looking at real estate opportunities, especially in light of lower debt and lending rates.
While commercial real estate has its problems, the sector isn’t headed for a crash, says property icon Donald Trump. “Commercial real estate will be severe, but nothing like the housing (crisis) that almost imploded our whole economy,†he told CNNMoney.com.
And the Federal Reserve Bank’s “termination†of a mortgage purchasing program won't be detrimental to the nascent economic recovery in the U.S., writes business pundit Brian Wesbury.
“With evidence of a self-sustaining economic recovery now hard to deny, many pundits are finding new reasons to be bearish. The most recent is that the Federal Reserve has officially ended its massive — $1.25 trillion — mortgage purchasing program,†writes Wesbury in his column in Forbes Magazine, along with his writing partner, Robert Stein.
But not everyone agrees.
Stocks may soon suffer a plunge, because the economic rebound stems from massive government stimulus that is unsustainable, says Kirby Daley, strategist at Newedge Group.
( I thought he has been saying this since last April )
"Right now we're enjoying the confluence of the implementation of massive stimulus, massive monetary stimulus as well as fiscal, around the world," he says.
"I don't believe we have 30 percent upside from here, I certainly believe we are at risk of 30 to 40 percent downside."
http://moneynews.com/StreetTalk/Gross-R ... /id/357195
Real estate is nearing a bottom and could eventually be a better bet for investors than stocks or bonds, says Pimco co-CEO Bill Gross.
Both commercial and residential real estate are reaching a bottoming point and possibly even prepared to turn higher, he says.
"Ultimately the riskier assets will be the less the risky assets," Gross says. "I wouldn't suggest moving into those particular sectors at the moment but ultimately risk and reward go together."
However, with stocks likely to return 5 to 6 percent and bonds 3 to 4 percent, Gross notes, investors would be wise to start looking at real estate opportunities, especially in light of lower debt and lending rates.
While commercial real estate has its problems, the sector isn’t headed for a crash, says property icon Donald Trump. “Commercial real estate will be severe, but nothing like the housing (crisis) that almost imploded our whole economy,†he told CNNMoney.com.
And the Federal Reserve Bank’s “termination†of a mortgage purchasing program won't be detrimental to the nascent economic recovery in the U.S., writes business pundit Brian Wesbury.
“With evidence of a self-sustaining economic recovery now hard to deny, many pundits are finding new reasons to be bearish. The most recent is that the Federal Reserve has officially ended its massive — $1.25 trillion — mortgage purchasing program,†writes Wesbury in his column in Forbes Magazine, along with his writing partner, Robert Stein.
But not everyone agrees.
Stocks may soon suffer a plunge, because the economic rebound stems from massive government stimulus that is unsustainable, says Kirby Daley, strategist at Newedge Group.
( I thought he has been saying this since last April )
"Right now we're enjoying the confluence of the implementation of massive stimulus, massive monetary stimulus as well as fiscal, around the world," he says.
"I don't believe we have 30 percent upside from here, I certainly believe we are at risk of 30 to 40 percent downside."
http://moneynews.com/StreetTalk/Gross-R ... /id/357195
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Bill Gross
by millionairemind » Mon May 10, 2010 9:44 am
Investment Outlook
Bill Gross | May 2010
Lovin’ Spoonful
There’s a surfeit of instructionals on the secret to investing, ranging from Investing for Dummies to The Intelligent Investor. My bookshelves at home are full of them, and I’ve learned or at least absorbed something from many. Experience is a great teacher, but the foundation of civilization, and too investing, is also dependent upon the capsulization of the experiences of others and that is where books have played a formative part in my own career. Still, there’s never been a book called “Common Sense for Dummies,†which would be required reading in my investment class if either existed. That’s an oxymoron to begin with, though, which points to the obvious – that common sense cannot be taught. It’s like sex appeal – you either have it or you don’t, although both are subject to relative judgments of the observer. What is commonsensical to one investor may seem ludicrous to someone else. And even in cases where history has validated the irrationality of one investment idea or another – the subprime frenzy being perhaps the most recent – there are questions of timing. Michael Lewis’s book The Big Short is not only a tale of the validation of common sense, but of its delicate shelf life. Most of Lewis’s heroes were almost all closed out by their own clients before their logic blossomed and their profits multiplied.
I’ve written on this topic before – an Investment Outlook in November of 2008 spoke to the necessity for a CQ – Common Sense Quotient – in addition to an IQ in order to succeed in investing. Actually, if a chef were to concoct a gourmet investment recipe, he would likely blend a teaspoon of intelligence with a tablespoon of common sense, but the same proportions would probably not apply in other professions. I can visualize the mad scientist irrationally pursuing an obvious dead-end only to – poof – incredibly discover penicillin or a cure for the common cold. Not so with investing, because prices are a delicate combination of mathematical value and human nature – something that quantitative scholars and practitioners rejected to their eventual ruin in their pursuit of “efficient†markets. And human nature, it seems, cannot be so easily modeled nor intelligently divined. It feeds on itself quite frequently, leading to accentuated periods of “greed†and “fear†that tend to be labeled “bubbles†or “black swans,†respectively. It is during those periods that a tablespoon of common sense is just the recipe for investment success.
Hanging on the wall above my office credenza is a portrait of Bernard Baruch, who authored the quotation, “Two plus two equals four and no one has ever invented a way of getting something for nothing.†Well, we’ve been there recently, with Dot Coms and subprimes and the financed-based prosperity of the past several decades. He also said, “Two plus two equals four, and you can’t keep mankind down for long.†Been there too, it seems, and the last 12 months are an apt example. Whatever the future holds, remember that a tablespoon is larger than a teaspoon, and that CQ beats IQ most of the time in the investment world. “Two plus two equals four†needs a lot of CQ, but requires only a second grader’s IQ.
In all of the hullabaloo over Goldman Sachs, a CQ analysis of the rating services – Moody’s, Standard & Poor’s and Fitch – has escaped front-page headlines. Not that a number of observers haven’t been on to them for a few years now, including yours truly. Back in July of 2007 some of you will remember my description of their role in the subprime crisis. “Many of these good-looking girls are not high-class assets worth 100 cents on the dollar. You were wooed, Mr. Moody’s and Mr. Poor’s, by the makeup, those six-inch hooker heels and a ‘tramp stamp.’†Now, it seems, I was a little long on humor and a little short on the reality. Tramp stamp and hooker heels do not begin to describe the sordid, nonsensical role that the rating services performed in perpetrating and perpetuating the subprime craze, as well as reflecting the general deterioration of investment common sense during the past several decades. Their warnings were more than tardy when it came to the Enrons and the Worldcoms of ten years past, and most recently their blind faith in sovereign solvency has led to egregious excess in Greece and their southern neighbors. The result has been the foisting of AAA ratings on an unsuspecting (and ignorant) investment public who bought the rating service Kool-Aid that housing prices could never really go down or that countries don’t go bankrupt. Their quantitative models appeared to have a Mensa-like IQ of at least 160, but their common sense rating was closer to 60, resembling an idiot savant with a full command of the mathematics, but no idea of how to apply them.
But I come not to bury the rating services, but to dismiss them. To tell the truth, they can’t really die – they serve a necessary and even productive purpose when properly managed and more tightly regulated. A certain portion of the investment world will always need them to “justify†the quality of their portfolios. Governments and regulatory bodies say so – it’s the law. In 1975 the SEC officially designated the aforementioned three rating agencies as “Nationally Recognized Statistical Ratings Organizations.†For all intents and purposes, that meant that regulated financial intermediaries such as banks, insurance companies and importantly pension funds would be guided by the sanctity of their ratings.
Such services, however, while necessary in the ongoing scheme of financial regulation, are overpriced as well as subject to the influence of the issuer, which in turn muddles their minds and clouds their judgment to say the least. E-mails from S&P employees have been cited discussing massaging subprime statistics in order to preserve S&P’s market share relative to their two competitors. PIMCO’s Paul McCulley said it as only he can – “[The breakdown of our financial system] was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out the fake IDs!â€
Still, as future bond issuers belly up to the bar with their rating agency seals of approval, it is incumbent on the buying public to treat those IDs with a healthy skepticism. Firms such as PIMCO with large credit staffs of their own can bypass, anticipate and front run all three, benefiting from their timidity and lack of common sense. Take these recent examples for instance: S&P just this past week downgraded Spain “one notch†to AA from AA+, cautioning that they could face another downgrade if they weren’t careful. Oooh – so tough! And believe it or not, Moody’s and Fitch still have them as AAAs. Here’s a country with 20% unemployment, a recent current account deficit of 10%, that has defaulted 13 times in the past two centuries, whose bonds are already trading at Baa levels, and whose fate is increasingly dependent on the kindness of the EU and IMF to bail them out. Some AAA!
Now let’s go the other way. GMAC, that only too recently near-bankrupt finance company, carries recently upgraded B ratings from the rating services. Profiles in courage for all three, I say! I mean the U.S. government has injected $20 billion of capital and owns 65% of the company. It’s the auto industry’s equivalent of FNMA and FHLMC, except those are AAA and GMAC is B with a “positive outlook!†For that, you can buy a GMAC two-year bond at 6½% (8% with what are called “smart notes†that Investment Outlook readers can buy through their broker), while you receive only 1.2% at Fannie and Freddie. Vive la différence!
No one or no one company has a monopoly on investment or ratings expertise. Second grade intelligence and a high CQ are a rare combination for an individual rating agency or an investment management firm as well. Still, the rating agencies in recent years have displayed little of either. In addition, they have brazenly sold their reputations for unbiased judgment to the very companies they were standing in judgment upon. Don’t bury them however; like vampires in the dead of the night they will outlast us all. Those looking to profit at their expense, however, will dismiss them. They no longer serve a valid purpose for investment companies free of regulatory mandates that can think with a teaspoon of IQ and a tablespoon of CQ.
William H. Gross
Managing Director
Bill Gross | May 2010
Lovin’ Spoonful
There’s a surfeit of instructionals on the secret to investing, ranging from Investing for Dummies to The Intelligent Investor. My bookshelves at home are full of them, and I’ve learned or at least absorbed something from many. Experience is a great teacher, but the foundation of civilization, and too investing, is also dependent upon the capsulization of the experiences of others and that is where books have played a formative part in my own career. Still, there’s never been a book called “Common Sense for Dummies,†which would be required reading in my investment class if either existed. That’s an oxymoron to begin with, though, which points to the obvious – that common sense cannot be taught. It’s like sex appeal – you either have it or you don’t, although both are subject to relative judgments of the observer. What is commonsensical to one investor may seem ludicrous to someone else. And even in cases where history has validated the irrationality of one investment idea or another – the subprime frenzy being perhaps the most recent – there are questions of timing. Michael Lewis’s book The Big Short is not only a tale of the validation of common sense, but of its delicate shelf life. Most of Lewis’s heroes were almost all closed out by their own clients before their logic blossomed and their profits multiplied.
I’ve written on this topic before – an Investment Outlook in November of 2008 spoke to the necessity for a CQ – Common Sense Quotient – in addition to an IQ in order to succeed in investing. Actually, if a chef were to concoct a gourmet investment recipe, he would likely blend a teaspoon of intelligence with a tablespoon of common sense, but the same proportions would probably not apply in other professions. I can visualize the mad scientist irrationally pursuing an obvious dead-end only to – poof – incredibly discover penicillin or a cure for the common cold. Not so with investing, because prices are a delicate combination of mathematical value and human nature – something that quantitative scholars and practitioners rejected to their eventual ruin in their pursuit of “efficient†markets. And human nature, it seems, cannot be so easily modeled nor intelligently divined. It feeds on itself quite frequently, leading to accentuated periods of “greed†and “fear†that tend to be labeled “bubbles†or “black swans,†respectively. It is during those periods that a tablespoon of common sense is just the recipe for investment success.
Hanging on the wall above my office credenza is a portrait of Bernard Baruch, who authored the quotation, “Two plus two equals four and no one has ever invented a way of getting something for nothing.†Well, we’ve been there recently, with Dot Coms and subprimes and the financed-based prosperity of the past several decades. He also said, “Two plus two equals four, and you can’t keep mankind down for long.†Been there too, it seems, and the last 12 months are an apt example. Whatever the future holds, remember that a tablespoon is larger than a teaspoon, and that CQ beats IQ most of the time in the investment world. “Two plus two equals four†needs a lot of CQ, but requires only a second grader’s IQ.
In all of the hullabaloo over Goldman Sachs, a CQ analysis of the rating services – Moody’s, Standard & Poor’s and Fitch – has escaped front-page headlines. Not that a number of observers haven’t been on to them for a few years now, including yours truly. Back in July of 2007 some of you will remember my description of their role in the subprime crisis. “Many of these good-looking girls are not high-class assets worth 100 cents on the dollar. You were wooed, Mr. Moody’s and Mr. Poor’s, by the makeup, those six-inch hooker heels and a ‘tramp stamp.’†Now, it seems, I was a little long on humor and a little short on the reality. Tramp stamp and hooker heels do not begin to describe the sordid, nonsensical role that the rating services performed in perpetrating and perpetuating the subprime craze, as well as reflecting the general deterioration of investment common sense during the past several decades. Their warnings were more than tardy when it came to the Enrons and the Worldcoms of ten years past, and most recently their blind faith in sovereign solvency has led to egregious excess in Greece and their southern neighbors. The result has been the foisting of AAA ratings on an unsuspecting (and ignorant) investment public who bought the rating service Kool-Aid that housing prices could never really go down or that countries don’t go bankrupt. Their quantitative models appeared to have a Mensa-like IQ of at least 160, but their common sense rating was closer to 60, resembling an idiot savant with a full command of the mathematics, but no idea of how to apply them.
But I come not to bury the rating services, but to dismiss them. To tell the truth, they can’t really die – they serve a necessary and even productive purpose when properly managed and more tightly regulated. A certain portion of the investment world will always need them to “justify†the quality of their portfolios. Governments and regulatory bodies say so – it’s the law. In 1975 the SEC officially designated the aforementioned three rating agencies as “Nationally Recognized Statistical Ratings Organizations.†For all intents and purposes, that meant that regulated financial intermediaries such as banks, insurance companies and importantly pension funds would be guided by the sanctity of their ratings.
Such services, however, while necessary in the ongoing scheme of financial regulation, are overpriced as well as subject to the influence of the issuer, which in turn muddles their minds and clouds their judgment to say the least. E-mails from S&P employees have been cited discussing massaging subprime statistics in order to preserve S&P’s market share relative to their two competitors. PIMCO’s Paul McCulley said it as only he can – “[The breakdown of our financial system] was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out the fake IDs!â€
Still, as future bond issuers belly up to the bar with their rating agency seals of approval, it is incumbent on the buying public to treat those IDs with a healthy skepticism. Firms such as PIMCO with large credit staffs of their own can bypass, anticipate and front run all three, benefiting from their timidity and lack of common sense. Take these recent examples for instance: S&P just this past week downgraded Spain “one notch†to AA from AA+, cautioning that they could face another downgrade if they weren’t careful. Oooh – so tough! And believe it or not, Moody’s and Fitch still have them as AAAs. Here’s a country with 20% unemployment, a recent current account deficit of 10%, that has defaulted 13 times in the past two centuries, whose bonds are already trading at Baa levels, and whose fate is increasingly dependent on the kindness of the EU and IMF to bail them out. Some AAA!
Now let’s go the other way. GMAC, that only too recently near-bankrupt finance company, carries recently upgraded B ratings from the rating services. Profiles in courage for all three, I say! I mean the U.S. government has injected $20 billion of capital and owns 65% of the company. It’s the auto industry’s equivalent of FNMA and FHLMC, except those are AAA and GMAC is B with a “positive outlook!†For that, you can buy a GMAC two-year bond at 6½% (8% with what are called “smart notes†that Investment Outlook readers can buy through their broker), while you receive only 1.2% at Fannie and Freddie. Vive la différence!
No one or no one company has a monopoly on investment or ratings expertise. Second grade intelligence and a high CQ are a rare combination for an individual rating agency or an investment management firm as well. Still, the rating agencies in recent years have displayed little of either. In addition, they have brazenly sold their reputations for unbiased judgment to the very companies they were standing in judgment upon. Don’t bury them however; like vampires in the dead of the night they will outlast us all. Those looking to profit at their expense, however, will dismiss them. They no longer serve a valid purpose for investment companies free of regulatory mandates that can think with a teaspoon of IQ and a tablespoon of CQ.
William H. Gross
Managing Director
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
-
millionairemind - Big Boss
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Re: Bill Gross
by millionairemind » Wed May 26, 2010 8:56 pm
Investment Outlook
Bill Gross | June 2010
Three Will Get You Two (or) Two Will Get You Three
http://www.pimco.com/LeftNav/Featured+M ... utlook.htm
Bill Gross | June 2010
Three Will Get You Two (or) Two Will Get You Three
http://www.pimco.com/LeftNav/Featured+M ... utlook.htm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
-
millionairemind - Big Boss
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Re: Bill Gross
by winston » Wed Jun 16, 2010 10:28 am
Bill Gross wants to get into Equities now ?
Wasnt he and Mohd El-Erian very negative on the Equities market not too long ago ?
Wasnt he and Mohd El-Erian very negative on the Equities market not too long ago ?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Bill Gross
by winston » Fri Jun 18, 2010 7:07 am
Bond King Gross is buying U.S. debt
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., boosted holdings of government-related debt to the highest since it held an equal amount in November.
The $227.9 billion Total Return Fund’s investment in government-related debt was increased to 51 percent of assets in May, from 36 percent the previous month, according to the website of Newport Beach, California-based Pimco.
Treasuries, part of the government-related category, are the premier holdings for fixed-income investors with the U.S. economy failing to produce private sector jobs and Europe’s sovereign-debt crisis threatening the region’s banking sector, Gross, 66, said this month.
“The U.S. is the least dirty shirt,†Gross, Pimco’s co- chief investment officer, said during a June 4 radio interview on Bloomberg Surveillance with Thomas R. Keene. “The world is full of dirty shirts in terms of excessive debt, and the United States is one of those countries, but it still remains the reserve currency and still remains the flight-to-quality haven.â€
Pimco’s U.S. government-related debt category can include conventional and inflation-linked Treasuries, agency debt, interest-rate derivatives, Treasury futures and options and bank debt backed by the Federal Deposit Insurance Corp., according to the firm’s website.
Gross held the Total Return Fund’s mortgage composition in May steady at 16 percent and decreased its high-yield holdings to 3 percent from 4 percent. Emerging-market debt was increased to a record 9 percent from 7 percent, and non-U.S. developed nation debt was cut to 6 percent from 13 percent.
Pimco’s spokesman Mark Porterfield has said the firm doesn’t comment on monthly changes in portfolio holdings.
Source: Bloomberg
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., boosted holdings of government-related debt to the highest since it held an equal amount in November.
The $227.9 billion Total Return Fund’s investment in government-related debt was increased to 51 percent of assets in May, from 36 percent the previous month, according to the website of Newport Beach, California-based Pimco.
Treasuries, part of the government-related category, are the premier holdings for fixed-income investors with the U.S. economy failing to produce private sector jobs and Europe’s sovereign-debt crisis threatening the region’s banking sector, Gross, 66, said this month.
“The U.S. is the least dirty shirt,†Gross, Pimco’s co- chief investment officer, said during a June 4 radio interview on Bloomberg Surveillance with Thomas R. Keene. “The world is full of dirty shirts in terms of excessive debt, and the United States is one of those countries, but it still remains the reserve currency and still remains the flight-to-quality haven.â€
Pimco’s U.S. government-related debt category can include conventional and inflation-linked Treasuries, agency debt, interest-rate derivatives, Treasury futures and options and bank debt backed by the Federal Deposit Insurance Corp., according to the firm’s website.
Gross held the Total Return Fund’s mortgage composition in May steady at 16 percent and decreased its high-yield holdings to 3 percent from 4 percent. Emerging-market debt was increased to a record 9 percent from 7 percent, and non-U.S. developed nation debt was cut to 6 percent from 13 percent.
Pimco’s spokesman Mark Porterfield has said the firm doesn’t comment on monthly changes in portfolio holdings.
Source: Bloomberg
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Bill Gross
by millionairemind » Thu Jul 08, 2010 8:03 pm
Investment Outlook
Bill Gross | July 2010
Alphabet Soup
http://www.pimco.com/LeftNav/Featured+M ... p+July.htm
Bill Gross | July 2010
Alphabet Soup
http://www.pimco.com/LeftNav/Featured+M ... p+July.htm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
-
millionairemind - Big Boss
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Re: Bill Gross
by winston » Mon Jul 26, 2010 9:45 pm
Gross: Look For Five Percent Stock Returns
By: Julie Crawshaw
PIMCO co-CEO Bill Gross says we're having "a mini-replay of 2008" in which return of money, not return on money, is becoming the dominant theme.
“Instead of 10 percent returns for stocks, look for five or so,†Gross told CNN Money. “And instead of the past 20 years' returns on bonds, which are actually better than stocks — close to double digits — it's 4 percent going forward.â€
That's what the “new normal†is, Gross says, “based upon the primary assumptions of a deleveraging of the private sector and the public sector being limited in what it can spend.â€
Gross says that the slight advantage stocks offer “barely†justifies their risk.
As to whether inflation or deflation is the most likely scenario, Gross sees four possible scenarios. “Scenario A is that the global economy rebounds back to past levels of high growth. B is just a decent rebound. C is that new normal — half-sized growth. And D is deflation, debt, destruction,†he observes.
“I'd say we're at a C — right now . . . what we're seeing in Europe puts the minus on that C grade.â€
Though he acknowledges that bonds may prove a less worthy investment in the future, Gross says that U.S. debt is still the best to buy.
“Canada and Australia are in decent shape,†he says. “Germany has been okay but is starting to get infected by Europe's troubles. Overall, the U.S. is still the clearest pond in the forest.“
This week, for the first time since the government started collecting the data, central banks, mutual funds and U.S. banks are buying more government securities at Treasury auctions than Wall Street's bond dealers, The Washington Post reports.
http://www.moneynews.com/StreetTalk/pim ... /id/365480
By: Julie Crawshaw
PIMCO co-CEO Bill Gross says we're having "a mini-replay of 2008" in which return of money, not return on money, is becoming the dominant theme.
“Instead of 10 percent returns for stocks, look for five or so,†Gross told CNN Money. “And instead of the past 20 years' returns on bonds, which are actually better than stocks — close to double digits — it's 4 percent going forward.â€
That's what the “new normal†is, Gross says, “based upon the primary assumptions of a deleveraging of the private sector and the public sector being limited in what it can spend.â€
Gross says that the slight advantage stocks offer “barely†justifies their risk.
As to whether inflation or deflation is the most likely scenario, Gross sees four possible scenarios. “Scenario A is that the global economy rebounds back to past levels of high growth. B is just a decent rebound. C is that new normal — half-sized growth. And D is deflation, debt, destruction,†he observes.
“I'd say we're at a C — right now . . . what we're seeing in Europe puts the minus on that C grade.â€
Though he acknowledges that bonds may prove a less worthy investment in the future, Gross says that U.S. debt is still the best to buy.
“Canada and Australia are in decent shape,†he says. “Germany has been okay but is starting to get infected by Europe's troubles. Overall, the U.S. is still the clearest pond in the forest.“
This week, for the first time since the government started collecting the data, central banks, mutual funds and U.S. banks are buying more government securities at Treasury auctions than Wall Street's bond dealers, The Washington Post reports.
http://www.moneynews.com/StreetTalk/pim ... /id/365480
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
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Re: Bill Gross
by winston » Tue Jul 27, 2010 9:28 pm
Gross: Three-Decade Bond Rally Ending
Monday, 26 Jul 2010
By: Julie Crawshaw
Pimco co-CEO Bill Gross says the 30-year-long bond rally will fizzle and expire as nations sell record amounts of debt to fund their deficits, a move that will in turn will spur inflation and push interest rates higher.
"Bonds have seen their best days," Gross told The Washington Post, adding that that as U.S. Treasury returns fall investors will have to take more risk with high-yield bonds, equities and, eventually, real estate.
"If you're talking about the next 10, 15, 20 years, there's certainly the recognition that assets will grow faster in those categories," Gross says.
"Over the long term, stocks return more than bonds when appropriately priced at the beginning of an investment period."
Gross’s firm began offering equities with EqS Pathfinder, a global fund the firm launched that buys undervalued securities, mainly in Europe. The fund, which had attracted more than $500 million, declined 1.7 percent in the month ended June 7, beating 96 percent of similarly managed funds.
Most of Pathfinder's major positions, which include British American Tobacco, French foodmaker Groupe Danone and Hong Kong’s Link Real Estate Investment Trust, make at least part of their earnings from emerging markets.
The fund also owns the SPDR Gold Trust exchange-traded fund.
Despite his forecast, Gross also recently increased holdings of government-related debt in his company’s Total Return Fund's to the highest level since last November.
With $1.1 trillion in assets, Pimco is the fastest-growing group of investors, accounting for 84 percent of all U.S. mutual fund assets at the end of last year, according to data from the Investment Company Institute in Washington.
http://www.moneynews.com/StreetTalk/bil ... /id/365633
Monday, 26 Jul 2010
By: Julie Crawshaw
Pimco co-CEO Bill Gross says the 30-year-long bond rally will fizzle and expire as nations sell record amounts of debt to fund their deficits, a move that will in turn will spur inflation and push interest rates higher.
"Bonds have seen their best days," Gross told The Washington Post, adding that that as U.S. Treasury returns fall investors will have to take more risk with high-yield bonds, equities and, eventually, real estate.
"If you're talking about the next 10, 15, 20 years, there's certainly the recognition that assets will grow faster in those categories," Gross says.
"Over the long term, stocks return more than bonds when appropriately priced at the beginning of an investment period."
Gross’s firm began offering equities with EqS Pathfinder, a global fund the firm launched that buys undervalued securities, mainly in Europe. The fund, which had attracted more than $500 million, declined 1.7 percent in the month ended June 7, beating 96 percent of similarly managed funds.
Most of Pathfinder's major positions, which include British American Tobacco, French foodmaker Groupe Danone and Hong Kong’s Link Real Estate Investment Trust, make at least part of their earnings from emerging markets.
The fund also owns the SPDR Gold Trust exchange-traded fund.
Despite his forecast, Gross also recently increased holdings of government-related debt in his company’s Total Return Fund's to the highest level since last November.
With $1.1 trillion in assets, Pimco is the fastest-growing group of investors, accounting for 84 percent of all U.S. mutual fund assets at the end of last year, according to data from the Investment Company Institute in Washington.
http://www.moneynews.com/StreetTalk/bil ... /id/365633
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 112616
- Joined: Wed May 07, 2008 9:28 am
Re: Bill Gross
by winston » Sat Aug 14, 2010 9:06 am
Pimco’s Gross: Fed won’t raise rates for at least two years
Written by InvestmentNews - 8/13/10
Pacific Investment Management Co.’s Bill Gross said the Federal Reserve is unlikely to raise interest rates for two to three years as it seeks to keep the economy from slipping back into recession.
Treasury two-year note yields dropped below 0.50 percent for the first time today after the Labor Department said the economy lost more jobs in July than economists forecast. The difference in yields between 2- and 10-year notes is 2.34 percentage points, more than double the average of 1.11 percent for the so-called yield curve over the past 20 years.
“When you analyze that portion of the curve, it says the Fed is on hold for a long, long time,†Gross said today during a radio interview on “Bloomberg Surveillance†with Tom Keene. “When you get down to 50 basis points on two-years, that’s giving you a signal that there’s not much left on the table.â€
Gross, manager of the world’s biggest bond fund, has been benefitting from the steep yield curve by buying five-year Treasuries, holding them for a year before selling to pick up capital appreciation as well as interest income. His $239 billion Total Return Fund has returned 13 percent in the past 12 months, beating 71 percent of its peers, Bloomberg data show.
“Hopefully as long as the curve stays steep and as long as the Fed stays where it is, then you produce two- to two-and-a- half returns as opposed to 50 basis points,†Gross said.
The Fed has maintained a range of zero to 0.25 percent for its benchmark rate for overnight loans between since December 2008 to encourage the economic recovery. Policy makers meet next week on Aug. 10.
The two-year note yield fell two basis points to 0.51 percent after falling to 0.4977 percent, the lowest level since the Treasury began regular sales of the securities in 1975. The 10-year note yield touched 2.8398 percent, the lowest level since April 2009.
Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.
Private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 rise in private jobs, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and the jobless rate held at 9.5 percent.
The U.S. faces long term structural unemployment near 7 percent, Gross said.
“The jobs that were will not be coming back and the unemployment rate of 4.5 percent is really a fiction of the levered era,†Gross said.
http://www.thetradingreport.com/2010/08 ... two-years/
Written by InvestmentNews - 8/13/10
Pacific Investment Management Co.’s Bill Gross said the Federal Reserve is unlikely to raise interest rates for two to three years as it seeks to keep the economy from slipping back into recession.
Treasury two-year note yields dropped below 0.50 percent for the first time today after the Labor Department said the economy lost more jobs in July than economists forecast. The difference in yields between 2- and 10-year notes is 2.34 percentage points, more than double the average of 1.11 percent for the so-called yield curve over the past 20 years.
“When you analyze that portion of the curve, it says the Fed is on hold for a long, long time,†Gross said today during a radio interview on “Bloomberg Surveillance†with Tom Keene. “When you get down to 50 basis points on two-years, that’s giving you a signal that there’s not much left on the table.â€
Gross, manager of the world’s biggest bond fund, has been benefitting from the steep yield curve by buying five-year Treasuries, holding them for a year before selling to pick up capital appreciation as well as interest income. His $239 billion Total Return Fund has returned 13 percent in the past 12 months, beating 71 percent of its peers, Bloomberg data show.
“Hopefully as long as the curve stays steep and as long as the Fed stays where it is, then you produce two- to two-and-a- half returns as opposed to 50 basis points,†Gross said.
The Fed has maintained a range of zero to 0.25 percent for its benchmark rate for overnight loans between since December 2008 to encourage the economic recovery. Policy makers meet next week on Aug. 10.
The two-year note yield fell two basis points to 0.51 percent after falling to 0.4977 percent, the lowest level since the Treasury began regular sales of the securities in 1975. The 10-year note yield touched 2.8398 percent, the lowest level since April 2009.
Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.
Private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 rise in private jobs, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and the jobless rate held at 9.5 percent.
The U.S. faces long term structural unemployment near 7 percent, Gross said.
“The jobs that were will not be coming back and the unemployment rate of 4.5 percent is really a fiction of the levered era,†Gross said.
http://www.thetradingreport.com/2010/08 ... two-years/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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