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Friday, February 27, 2009

Bill Gross Declares The Death of Equities

Bill Gross, the manager of the monster "PIMCO Total Return" bond fund declared the death of equities according to Peter Cohan.

Cohan wrote:
Stocks are dead for the rest of your life. That's the gist of my exclusive interview with the head of PIMCO Total Return -- the biggest bond fund you've never heard of...

Gross shared his economic outlook with me yesterday in an exclusive interview -- and he's not optimistic...
Gross saw the interview and e-mailed me. I replied by telling him that I had some questions about PIMCO and his views on economic prospects. I found his answers informative and insightful and he agreed to let me post on his economic outlook which is very grim for those who believe that stocks outperform bonds. In Gross's view, the current economic contraction is killing the animal spirits that drive risk taking and that's contributing to the death of equity capitalism as we've come to know it.
and..
And in Gross's view, growth prospects are so dim that there is no point in owning stocks since common stock investors will not benefit when there's no economic growth. Moreover, they'll be last in line for any dividends that might be available.
April 21, 2010 update: As it turns out, the S&P500 has nearly doubled off the bottom in the year since Bill Gross called for the "death of equities." Click the chart below to see the S&P500 between January 2009 and today.

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
As of 4/20/10, the explore portfolio is up 10.3% YTD
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Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

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click for full size image courtesy of stockcharts.com



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