Stocks are dead?? (bond, cash, dividends, corporation)

[MountainBiking]

Interesting article regarding PIMCO's Bill Gross. He says that stocks are dead and that consistent, annual returns are a thing of the past. Your thoughts.

Clickity-click:

Bill Gross: We're Witnessing the Death of Equities - MarketBeat - WSJ


-Cheers.

[bmw335xi]

he is full of %#^*

[LordSquidworth]

It depends on what stocks you pick. There are tons of lousy stocks. But they're far from dead.

Bonds on the other hand... aren't even worth looking at their current rates.

[TuborgP]

Originally Posted by MountainBiking

Interesting article regarding PIMCO's Bill Gross. He says that stocks are dead and that consistent, annual returns are a thing of the past. Your thoughts.

Clickity-click:

Bill Gross: We're Witnessing the Death of Equities - MarketBeat - WSJ


-Cheers.

That is being said by many these days. Low volume, retail/individual investors leaving in droves and so much now a result of traders and computers. The question is what money is there to drive the market higher?

[eskercurve]

Originally Posted by TuborgP

That is being said by many these days. Low volume, retail/individual investors leaving in droves and so much now a result of traders and computers. The question is what money is there to drive the market higher?

I read his PIMCO letter. Here are my thoughts.


I think the PIMCO article re: stock returns on the DOW outstripping the tax and GDP gains is misleading. The DOW is only an indicator for the economy as a whole, and not all companies are a member of the index, nor are even all companies on the stock market as publicly traded corporations. I think he had an interesting point about tax rates and wages slipping and postulating that the money flow has been to investors and money creation through debt issues, and he is probably right. But does it mean that the whole market has been rigged? I would concur that the average Joe sixpack blue collar worker has been ****ed since the late 60s / early 70s and wages haven't kept pace with inflation and the record corporate profits have been largely funneled back to the investor class.

Even if you ignore the class warfare, focus on the fact the Dow has the biggest companies in the US in its index. The fact their growth in stock price including dividends have outstripped GDP means that their growth has been bigger. That's not a surprise given the global nature of their businesses. It's expected that green field investment will yield phenomenal gains in value (so long as its meaningful, look to Master Lock for a good example of the opposite).

The point here is I don't see this stopping in the near term.

Also, another point I would argue is the lack of indication of how technology has increased productivity of the average worker at least tenfold since the late 60s. I know a guy who's about a million years old but looks 50s. He says that in the old days in the early 70s when he started working for Boeing they had rows of drafting desks and guys smoking cigarettes and cigars and pipes which created a haze in the office. Managers swore, spit at, created gossip, and actively belittled people who didn't perform well. They would tear up drawings, just because of a little smudge.

But it also took FOREVER to do simple tasks. He predicted that if technology hadn't increased productivity, then it would take 30 years to design a new airplane given the regulatory demands. But since technology is advancing so much today that it doesn't matter how much the Feds turn the screws. Boeing will be able to show compliance through ever increasingly complicated analysis. And we just have to keep innovating.

At the end of the day, resource extraction, outsourcing, and trade levels have more than made up for the disconnect between the GDP and Dow, even if the two were close to one another.

The only thing I would agree with in the two newsletters you sent is that gold and silver, along with other commodities, should be a part of your portfolio. It makes total sense. Having 25% cash or equivalent, 25% stocks, 25% commodities or equivalent, and 25% debt (if you're conservative), and rebalancing every so often, guarantees that your ass is covered in all situations: cash for deflation and **** economy, stocks and commodities for growth, commodities for inflation, debt for priming to grow / **** economy.

[mathjak107]

he called treasuries pretty wrong when he dumped all of them forecasting they would plunge and i think he is calling this wrong too.

its not going to be an easy ride for stocks and gains will more than likely be reduced but stocks and gdp growth dont follow each other more ofton than not.

when the economy does the best and profits are highest stocks do the worst.

both research by ned davis group and the book a random walk down wall street studied this and go into this in great detail.

when profits rose more than:


20% the s&p returned a mere 1.3% in gains

10 to 20% saw 5.8% in gains

(-10% to + 10% in profits saw a 9.3% jump in gains

(-10%) to (-25%) drop in profits saw 28.6% gains

(-25%) and lower saw a -28% drop in share price.

[Teak]

Gross also said that bonds are a bad buy now also. So what does he want us to do? Oh yeah, I get it; invest with him, he will put our money to work.....yeah, right.

[bbnetworking]

what other option do we have? put it in cash and have inflation hit it?

[Billy_J]

My concern about bonds is that the current generation of young people does not feel they should have to repay loans.

So what will happen when these people get into decision making positions with large corporations? Not pay the bonds?

There are types of bonds which are secured by property and the company is also required to place the eventual repayment of principal aside each year. That may be the corporate bond of the future...

[CouponJack]

Originally Posted by bbnetworking

what other option do we have? put it in cash and have inflation hit it?

There definitely are many roads to dublin...


Some people do not follow the opinions of one person....some feel its just noise...


Many here suggest a permanent portfolio type allocation. Also, owning real estate I've found can be quite profitable, however its not easy and alot of work......

Each has their positives and negatives...

Just remember there is no perfect plan.....just a good plan.