Bill Gross Thinks 2015 Is The Year It All Falls Apart!
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- Bill Gross Thinks 2015 Is The Year It All Falls Apart!
by Samantha Sharf, Forbes Staff, via http://www.msn.com/en-us
The illustration atop bond legend Bill Gross’ latest investment outlook letter features the classic New Years baby donning a top hat and 2015 sash. Sitting beside him is an old man with a long gray beard, cane and an hourglass (think Moses). Gross, who controversially joined tiny Janus Capital Group in September from Management Company the mammoth bond firm he founded in 1971, argues in the letter out Tuesday that the baby is the market’s past and the old man is its future.
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Gross writes, “Beware the Ides of March, or the Ides of any month in 2015 for that matter. When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over.” (The underline is his.) Gross declined to pinpoint an exact date for the downturn but reasons it is inevitable as low or negative yields “fail to generate sufficient economic growth,” corporations become borrowers rather than investors and structural elements (demographics, technology and globalization) shift unfavorably.
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“There comes a time when common sense must recognize that the king has no clothes, or at least that he is down to his Fruit of the Loom briefs, when it comes to future expectations for asset returns,” he writes. “Now is that time and hopefully the next 12 monthly ‘Ides’ will provide some air cover for me in terms of an inflection point.”
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Nods to antiquity and undergarments notwithstanding Gross’ writing here is tame when you consider in the last year alone he has compared himself to Justin Bieber and James Bond. Yet his call for minus signs marks a more negative view than he had explicitly shared previously. In October, he was far from bullish but said he did not foresee a “significant bear market” and called for returns returns of 2-4% in bonds and 5-6% in stocks over the next seven years. Gross will share his 2015 forecasts for interest rates and risk assets at Barron’s Roundtable later this month.
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