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A word of warning from Bill Gross on 2010 investments

with one comment

The world’s greatest bond investor, Bill Gross of Pimco, writes in his January 2010 newsletter to warn investors that the good times since last March could soon be over as central banks look to exit their emergency stimulus packages (click here for the newsletter).

The crux of the matter is in his final paragraph: ‘If exit strategies proceed as planned, all US and UK asset markets may suffer from the absence of the near $2 trillion of government checks written in 2009. It seems no coincidence that stocks, high yield bonds, and other risk assets have thrived since early March, just as this “juice” was being squeezed into financial markets’.

And his conclusion: ‘If so, then most “carry” trades in credit, duration, and currency space may be at risk in the first half of 2010 as the markets readjust to the absence of their “sugar daddy.” There’s no tellin’ where the money went? Not exactly, but it’s left a suspicious trail. Market returns may not be “so fine” in 2010’.

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Written by Peter Cooper

January 10, 2010 at 11:21 am

One Response

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  1. Bill Gross is, without a doubt, one of the world’s most successful bond investors. I have not doubt that IF Bernanke begins “the exit”, events will unfold as Gross has indicated.

    More Importantly, however, I have no doubt that Bernanke & the fraudulent Federal Reserve will not begin their “exit strategy” this year. As Marc Faber recently has stated, the FED will continue to print massive amounts of fiat money, in the futile hope that it might help them out of the total mess that they have created. After all, it’s an election year, and Ben is a political animal.

    obewon

    January 10, 2010 at 8:50 pm


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