Great Piece on Bill Gross and El Erian

[Magox]

I read a fantastic article on these two geniuses.

 

http://www.bloomberg.com/news/2010-06-24/g...bal-stocks.html

 

The three-decade rally in bonds, the very securities that made Gross famous, will eventually fizzle out, according to Pimco’s outlook. Gross says the rally will come to an end as nations sell record amounts of debt to fund their deficits, spurring a return of inflation and rising interest rates.

 

Bonds Best Days

 

“Bonds have seen their best days,” says Gross, who anticipates returns of 4 percent to 5 percent in the new normal.

 

The king of bonds is now talking up stocks as a better long-term investment. He says 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,” he says. “Over the long term, stocks return more than bonds when appropriately priced at the beginning of an investment period.”

 

Gross’s prophecy on bonds may not be coming true anytime soon. Since May, when he warned that European nations like Greece can’t rely on growth to finance their soaring deficits and would likely default, investors have poured into U.S. Treasuries.

 

Hey Chef, I know we were discussing this some time ago, thought you would find that interesting.

 

While Pimco estimates that U.S. debt has the potential to soar to 90 percent of gross domestic product, the country remains a haven for investors. Even Gross increased his Total Return Fund’s holdings of government-related debt, which includes U.S. Treasuries, in May to the highest level since November. The yield on the 10-year Treasury note fell to 3.12 percent as of 5 p.m. yesterday.

 

Spearheading Pimco’s push into equities is EqS Pathfinder, a global fund the firm launched in April that buys undervalued securities, mainly in Europe. Its only U.S.-based holding in the top 10 positions is SPDR Gold Trust, an ETF that buys gold.

 

Thought that was interesting as well. Anyway, if economic guys have a little time, there was some interesting insight in this article, great read.

[Hossage]

Word, Cotton, you are nuts if youre in bonds.