Nov 19

What Does Bill Gross Think?

Posted by Kristjan Velbri | Posted in Economy, Finance, Markets | Posted on 19-11-2009

This is from Bill Gross’s Investment Outlook for the month of December, published this morning. I recommend reading the entire article, but here is the punchline:

“…before moving on, let me state the obvious, but often forgotten bold-face fact: The Fed is trying to reflate the U.S. economy. The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher-risk bonds or stocks. Once your cash has recapitalized and revitalized corporate America and homeowners, well, then the Fed will start to be concerned about inflation – not until.”

Mr. Gross publishes his Investment Outlook every month and it is always a worthwhile read. Sometimes his letters seem sort of like stating the obvious, but that is actually not a bad thing. Mr. Gross works for PIMCO, which is said to be the biggest bond fund in the world. The people at PIMCO are as professional as you can get – people all around the world would pay thousands, and indeed they do, to get some idea of what people like Bill Gross, Warren Buffet and Marc Faber think about the markets and the economy*. They’ve been in this business far longer than most investors and as a consequence, they know more and it pays to listen to what they’ve got to say.

You can sign up for e-mail updates. In addition, there are other contributors worth reading at PIMCO – check them out!

*These three names are just an example, they are by no means the only geniuses out there.

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