Stocks are at fresh all-time highs and investors seem to be feeling better about the economy. While investors’ sentiment may not have yet reached the euphoric stage, stocks could potentially have some room to run higher.
Or could they?
While stock bullishness appears to still be at healthy levels, some investors may be questioning just how much further the current rally can run.
Some investors, like Janus Capital Group portfolio manager Bill Gross, feel that perhaps investors should be cutting their risk.
Of particular note (coming from the man people have referred to as “the bond king”), was this statement from Gross: “I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories.”
Wait a second… Buy land, buy gold, buy real, hard assets? Where have we heard this before…
Gross believes that investors should accept lower returns, and that markets will not offer double digit gains in a zero interest rate environment.
While low interest rates may boost asset prices (as we have been seeing for years), they do come with a price.
Mr. Gross stated: “Banks, insurance companies, pension funds and Mom and Pop on Main Street are stripped of their ability to pay for future debts and retirement benefits. Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates.”
He continued “Overall, global monetary policies cannot succeed without nominal growth. The reason nominal growth is critical is that it allows a country, company or individual to service their debts with increasing income, allocating a portion to interest expense and another portion to theoretical or practical principal repayment via a sinking fund.”
“Without the latter, a credit-based economy ultimately devolves into Ponzi finance, and at some point implodes.Watch nominal GDP growth.”
Bill Gross has been one of the most highly respected persons in the world of global finance for many, many years.
When he talks, people listen. Perhaps you should too, and consider what he is saying.
If you don’t already own real, hard assets, now may be the time to consider an allocation.
Physical gold and other precious metals may be a great choice for their reputation, global recognition and inherent value.
Buying physical gold has never been easier, and is a lot simpler than the average real estate deal.
It starts with a phone call…
Speak with an Advantage Gold account executive today about your options for buying and holding physical gold. Our precious metals professionals are here to answer your questions, and show you the easiest path to gold ownership. Our representatives can even show you how to buy and accumulate physical gold using your IRA account.
Don’t wait for the next stock market crash or for interest rates to go even lower before acting. Incorporate physical gold into your long-term investment plans by calling us today at 1-800-341-8584.Tags: bill gross, bond king, GDP, gold, growth rate, low interest rates, portfolio management, real assets