Bill Gross, the “Bond King” says the best might be over for stocks, and investors should not expect outsized gains in 2015, according to Reuters. The manager of the largest bond fund in the world and co-founder of PIMCO, a firm he left in September to work at rival Janus, said, “Be cautious and content with low positive returns in 2015. The time for risk taking has passed .. When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over, ” said the manager of the Unconstrained bond fund.
Gross blames Fed policy for the current situation, as artificially low interest rates might have been great for the stock market, but could not spur growth in the economy that would have made those share gains sustainable.
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As reported by Marketwatch, Gross said, “There comes a time when common sense must recognize that the king has no clothes, or at least he is down to his Fruit of the Loom briefs, when it comes to future expectations for asset returns. Now is the time and hopefully the next 12 monthly “Ides” will provide some air cover for me in terms of an inflection point.” Fruit of the Loom. Ides. Air cover. Well, the man employs colorful rhetoric.
What investment does Gross recommend now that the “good times are over?” He told Reuters, “high quality assets with stable cash flows such as Treasury and high-quality corporate bonds, as well as equities of lightly levered corporations with attractive dividends and diversified revenues both operationally and geographically.”
So even when the sky is falling, there is always something to buy.