'Worship' of Stocks Is Dead: Bill Gross
By CNBC | CNBC – 54 minutes ago
@cnbc on Twitter
Gross: The Cult of Equity is DyingBill
Gross, Pimco co-CIO & founder, offers insight on what he calls
"death of equity." Thomas Lee, JPMorgan; Michael Pento, Pento Portfolio
Strategies; and CNBC's Rick Santelli, weigh in.
Investors, especially the "Baby Boomers" born after World War II, should brace themselves for lower returns. He differentiated between stocks as an asset class, and the unrealistic expectations some investors have about their potential for returns, which he called a "cult".
"Equities have reached a dead end in terms of significant appreciation," Gross said. "Equities are still alive, but the cult of equities is dying."
He said investors may want to search for investments other than in stocks and bonds, such as land or other assets.
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http://finance.yahoo.com/news/worship-stocks-dead-bill-gross-193648902.html
When I read things like this I wonder on some levels what they are talking about? Because on one level what they say is true in that actual returns now are less than the 1990s and the early 2000s. However, tell me what is a better investment that is potentially liquid within a day or two? Real Estate might be great if you are going to live there full time and can pay cash for it and can choose whether to sell or not within a 50 year window. But still, that investment cannot be considered to be a potentially liquid investment. Gold and silver are going to seesaw and I personally have never come out ahead investing in gold ever. So, for me it is a lifetime investment (for some real emergency) or it is nothing at all.
So, then we are left with automobiles as an investment or planes or stocks and bonds. Unless it is an antique auto or vehicle that you have a crew to maintain and to keep up it likely is going to fall in value rather quickly over any 10 year period. The same might be true of planes, or boats or ships of all kinds. So, where is it that they are telling you to invest? What are treasuries paying right now? 1 or 2 percent? So, if you want a potential return of over 5% to 10% a year on your investments where else are you going to get that but in stocks or bonds like municipal bonds which are tax free both state and federal.(If you combine the return and the tax breaks you often wind up with a 9% to 10% return) In the last Great Depression (this one looks like the Great Recession may be turning into another Great Depression like event because of what is presently happening in Europe and China combined with what is happening in the U.S. drought because of food prices and now oil prices are going higher as well). So, anyway during the last great depression the most predictable and stable and secure investment was in municipal bonds. However, if cities keep going bankrupt in California and other places if the U.S. municipal bonds that aren't insured in some way they won't be invested in eventually except by Hedge fund investors and high risk investors like that. And even then they won't invest unless the return increases which could really devastate U.S. infrastructure further.
So, where exactly do these people think people SHOULD invest?
Also, in regard to food prices going up it was said on the news last night that a family of 4 can expect to pay $615 more next year for food. And if you combine that with what that will do to the rest of the world when the U.S. buys their grain from abroad to replace ours lost here to the drought you can expect further events in poorer countries that remind one of Arab Spring in the coming years.
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