Bill Gross and PIMCO November Investment Outlook Changes to Altruistic

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Bill Gross of PIMCO, aka The Bond King, is out with the November investment outlook. This one is titled “Time to Vote!” and the headline is one that will likely keep Mr. Gross from having to explain himself and fight so many media pundits for weeks ahead. He was right about the world of low returns, but having a headline with the death of the cult of equities caused more of a stir than he probably cared to answer to.

In this month’s report he said that it doesn’t matter if Obama or Romney wins: “Fact is they’re all the same – bought and paid for with the same money.” Gross then went on to say:

The “people” are merely election-day pawns, pulling a Democratic or Republican lever that will deliver the same results every four years. “Change you can believe in?” I bought that one hook, line and sinker in 2008 during the last vestige of my disappearing middle age optimism. We got a more intelligent President, but we hardly got change. Healthcare dominated by corporate interests – what’s new? Financial regulation dominated by Wall Street – what’s new? Continuing pointless foreign wars – what’s new?”

Gross goes on talk about financial repression via near-zero interest rates forcing you to spend money. He also said that, while spending is still on the rise, corporations are not investing in capital spending for future production. To live up to his “death of the cult of equities” theme of low returns ahead, Gross said, “portfolio strategies should acknowledge bite-sized future returns and the growing risk that the negative consequences of misguided monetary and fiscal policy might lead to disruptive financial markets at some future point.” He even restates that the death of the cult of equity is really the cult of total returns in bonds and stocks.

By calling out the politicians as the same and by taking a tempered approach and explanation of his past two monthly outlooks, Bill Gross has taken the path of no controversy. That is true even if he is not being supportive of Obama nor offering praise for Romney.

FULL GROSS/PIMCO INVESTMENT OUTLOOK

JON C. OGG

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