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This was widely written in many publications in 1978-1979.
Gross is another billionaire attention hoar like Buffet who made a lot
of money, but lately had really done a crappy job for their investors.
Generally, when you are reading a lot about how crappy equities are, they are set to turn up.
The opposite is true when you are reading about how they are so wonderful and likely to keep going up ...
..... like in 1999 ... and in 1929 .... I could go on.
He has a point, to some degree. Baring something, the stock market can't keep returning 6%+ in real returns while GDP is increasing by half of that. Of course, that something is trade. Take AAPL. Massively profitable, but it adds comparatively little to GDP. So yeah, GDP didn't grow that much in America, but equities profited handsomely off of growth of GDP in China and Taiwan. As long as that continues, I agree. He's full of it
He has a point, to some degree. Baring something, the stock market can't keep returning 6%+ in real returns while GDP is increasing by half of that. Of course, that something is trade. Take AAPL. Massively profitable, but it adds comparatively little to GDP. So yeah, GDP didn't grow that much in America, but equities profited handsomely off of growth of GDP in China and Taiwan. As long as that continues, I agree. He's full of it
Factor in the Dow is merely the top companies in the USA, but definitely NOT representative of the rest of enterprise in America, aka USA Inc. What % of companies in the US are even listed on the exchange? Even Facebook, a very very large company, was private until recently (and should have stayed private really).
You can have the top 10% of companies who have 6-8% growth through international business and domestic business, but the rest of the economy do poorly and thus outstrip GDP growth. I mean that's what is happening in the USA right now. Small mom and pop shops are really hurting but the big boys are getting record profits. It's amazing to me that he didn't realize that. The Dow is an indicator. Plain and simple. Nothing more. It's a microcosm, nothing more.
Factor in the Dow is merely the top companies in the USA, but definitely NOT representative of the rest of enterprise in America, aka USA Inc. What % of companies in the US are even listed on the exchange? Even Facebook, a very very large company, was private until recently (and should have stayed private really).
You can have the top 10% of companies who have 6-8% growth through international business and domestic business, but the rest of the economy do poorly and thus outstrip GDP growth. I mean that's what is happening in the USA right now. Small mom and pop shops are really hurting but the big boys are getting record profits. It's amazing to me that he didn't realize that. The Dow is an indicator. Plain and simple. Nothing more. It's a microcosm, nothing more.
Look at cap-weighted versus equal-weighted returns on the S&P 500, interesting. Same thing applies. The small guys in the S&P have done amazingly well. The big boys not so much, at least over the last three years. Esoterics on how inappropriate this indicator is and how this indicator is so much more awesomely good at accurately reflecting the real economy... both the DOW and S&P 500 move in the same general direction, not that I would ever call either of them indicators of the real economy. Do you think the real economy lost 50% of its output when the market crashed? Do you think its grown 100% since then?
I'd say the overwhelming majority of companies are listed on the exchange. Between NYSE and NASDAQ, you're looking at over 5,000 companies and certainly all the major ones.
One of the stock gurus was on TV other day, and said when he graduated from college in 1967, Dow was in 1,000, 15 years later in 1981, Dow was at 1,000. and look at where we are now.
World isn't about to end, population will grow another billion in 10-15 years. GDP will continue to grow.
If stock returns have to match GDP growth, and if annual GDP growth in the US is only 3%, is Gross saying it is better to invest in emerging markets such as China where GDP growth is 7 to 8%? Maybe that's what he is trying to say.
If stock returns have to match GDP growth, and if annual GDP growth in the US is only 3%, is Gross saying it is better to invest in emerging markets such as China where GDP growth is 7 to 8%? Maybe that's what he is trying to say.
Since I listen/watch CNBC and Bloomberg most of the day I have a hunch Gross is saying what a lot of other folks are saying but in a different way. This way in a year or so he can claim his supposition was right based on what has happened without having to share credit with a lot of other folks.
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