The Buzz

All markets and investing news all the time

Bill Gross: Be very afraid of the markets

January 31, 2013: 11:38 AM ET

Bond guru and Pimco (PTTRX) managing director Bill Gross isn't buying into the bull market. In fact, he's warning investors to be afraid, be very afraid, of how inflation and the flood of cheap money will affect all investments.

Investors should be prepared to accept "lower returns on bonds, stocks, real estate and derivative strategies," Gross wrote in his monthly letter entitled "Credit Supernova!"

Championing something of a bunker mentality, Gross told investors to buy Treasuries with shorter durations and buy gold or other investments that "you can sink your teeth into."

Go outside of the U.S., he says. Buy currencies from countries "with less hyberbolic credit systems" including Australia, Brazil, Mexico or Canada. The U.S. won't fit that bill.

He doesn't suggest totally eschewing stocks, but says investors should look to global stocks with stable cash flows.

Related: What's behind the bull market

Gross has been warning investors about the potential downsides of the Federal Reserve's bond buying strategy for months, but the tone of this month's letter was decidedly more fearful.

While the letter's title obliquely references the band Oasis, Gross opted to lead his monthly missive with an ominous T.S. Eliot quote rather than his usual song lyric: "This is the way the world ends... Not with a bang but a whimper."

The world Gross refers to is the monetary system. "Today's near zero bound interest rates cripple savers and business models previously constructed on the basis of positive real yields," Gross writes.

Related: Bill Gross: Avoid long-term bonds

Gross admits that "the end of the global monetary system is not nigh," but says we're approaching a time where "investable assets pose too much risk for too little return."

What else should an  investor do to prepare for what Gross sees as something of a financial Armageddon? He says one of his investment committee members wants to buy land in New Zealand and set sail. Land has an inherent value, suggests Gross, unlike other so-called investable assets.

  • Zillow stock tumbles on SEC disclosures

    Zillow's stock fell sharply Tuesday following the disclosure of previous correspondence between the company and the Securities and Exchange Commission regarding questions about the company's sales.

    Shares of Zillow (Z), the real estate website, dropped as much as 10.2% in early trading, the biggest one-day decline since November, before trimming some of the losses. By the afternoon, Zillow was down about 4%.

    The stock first began to fall after some written exchanges from August MORE

    - Oct 2, 2012 1:51 PM ET
  • Trulia stock soars in debut

    Real estate search firm Trulia (TRLA) kicked off life as a public company with a bang.

    Trulia's stock opened 30% above its IPO price when it started trading on the New York Stock Exchange Thursday morning. It quickly gained momentum, rising as high as $25 (47% above the IPO price).

    Late Wednesday, Trulia's underwriters, J.P. Morgan (JPM) and Deutsche Bank (DB), sold 6 million shares at $17 apiece -- above the MORE

    - Sep 20, 2012 11:12 AM ET
  • Is the homebuilder rally for real?

    Shares of homebuilders rallied Wednesday after Toll Brothers reported strong quarterly results and an industry group said home sales rose in July.

    The nation's leading luxury homebuilder reported a 46% jump in net income to $61.6 million in the quarter ended July 31. Toll Brothers also said new contracts rose 57%, and its contract backlog grew 44% during the quarter.

    Toll Brothers (TOL) stock gained nearly 4% Wednesday. Shares of Hovnanian (HOV), MORE

    - Aug 22, 2012 1:55 PM ET
  • Trulia files for $75 million IPO

    Trulia Inc., the company behind real estate website Trulia.com, filed for an initial public offering that is expected to raise as much as $75 million, though the company did not specify how many shares it plans to sell or how they will be priced.

    Earlier in the summer, Trulia filed for a so-called confidential IPO thanks to the Jumpstart Our Business Startups, or JOBS Act, which was signed into law in April.

    The law allows "emerging MORE

    - Aug 17, 2012 10:39 AM ET
Fear & Greed
Sponsored by

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Move of the Day! Why is $WFM up 2.6% on no news? Still facing challenges. Recent earnings from $KR shows competition is brutal.
Powered by WordPress.com VIP.
Follow

Get every new post delivered to your Inbox.

Join 235 other followers