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Bill Gross Says Historic Investment Returns Are Impossible To Repeat
FYI: Bond investor Bill Gross of Janus Capital Group Inc said on Thursday the historic returns that investors have reaped for over four decades are over, given the near end of falling rates and tremendous credit expansion. Regards, Ted http://www.reuters.com/article/us-funds-janus-gross-idUSKCN0YO1DO
Hard to argue with the low yield in US and Japanese bonds, and in some case negative yield in European bonds. All the QE around the globe is not helping for those who need income in their retirement.
Mr. Gross may be correct with some of his notations. However, will his skills; and his perceptions of problems, way has the Janus fund he manages provided such low returns. Perhaps a "forest and the trees" syndrome, eh? With regard to low interest rates/yields. Well, central banks may continue to have many trapped with current and future policies. I don't feel that they have a real plan most days of the week. But, I'm not a trained economist, so what do I know. Being a "friend of bonds" as much as equities; my larger concern is the amount of corporate borrowing at these low rates. Borrowing of its own accord is not a problem; but how the borrowed money is spent may prove to be the real problem going forward. I remain concerned about "crash and burn" when bad spending choices are in place from a company(s). I don't believe for a minute that a money house is going to dissuade a company from issuing bonds for whatever. The money house does profit from this action, eh? Lastly, bond investors can and do make a living, too; including we individuals. Regards, Catch
Sometimes I think some high profile managers say things to draw attention to themselves to keep them in the spotlight. Is Bill Gross even relevant anymore?? We have been hearing for more than a few years now how low returns going forward will be the norm. That high profile manager from GMO (among others) was saying that back in 2010. As for the present, seems like small and mid cap biotech has been having a stealth rally. Maybe those closer to that area can confirm. SUPN anyone?
Bill Gross and many others are "talking their book" by trying to set the bar as low as possible. The same thing is done with executive compensation, where CEOs earn huge bonuses by exceeding very low expectations.
Comments
With regard to low interest rates/yields. Well, central banks may continue to have many trapped with current and future policies. I don't feel that they have a real plan most days of the week. But, I'm not a trained economist, so what do I know.
Being a "friend of bonds" as much as equities; my larger concern is the amount of corporate borrowing at these low rates. Borrowing of its own accord is not a problem; but how the borrowed money is spent may prove to be the real problem going forward. I remain concerned about "crash and burn" when bad spending choices are in place from a company(s). I don't believe for a minute that a money house is going to dissuade a company from issuing bonds for whatever. The money house does profit from this action, eh?
Lastly, bond investors can and do make a living, too; including we individuals.
Regards,
Catch