- Treasury bonds are obviously not to be favored because of their negative (unreal) real yields.
- U.S. TIPS, while affording headline CPI protection, risk the delusion of an artificially low inflation number as well.
- On the other hand, commodity-based assets as well as foreign equities whose P/Es are better grounded with local CPI and nominal bond yield comparisons should be excellent candidates.
- These assets should in turn be denominated in currencies that demonstrate authentic real growth and inflation rates, that while high, at least are credible.
- Developing, BRIC-like economies are obvious choices for investment dollars. Read more...
By: Drizzt
This is not the first time that i posted an essay by Bill Gross. Why do i post so much article on the man? I admire him for his profound commentaries on the market. Sometimes it gets so profound that i need to reread what he wrote a few times just to get what the heck he is trying to say.
At the same time, it is interesting to listen to what the world’s largest bond fund manager have to say about the current investment climate, and in this article it gets really hard hitting. He lambastes Americans’ priorities with entertainment more then the more important things and more importantly, how they interpret data brought in front of them without any questions asked.
More importantly, inflation is understated in the US. Now inflation to bill gross is an important indicator. A wrong view on inflation moving forward can just fuck him up so badly since, as i have said he manages alot alot alot of bonds, and inflation is bonds’ worse enemy.
So what is his advice as a manager?: