OT: future market returns
A quote from a recent article on CNBC:
"Bill Gross has some bad news for investors.
In his June investment outlook released Thursday, the widely followed bond fund manager contended that bond and stock returns realized in the last 40 years are "a grey if not black swan event that cannot be repeated." Investors should not expect 7 percent returns on bonds or returns in the high single digits or double digits on stocks, Gross told CNBC on Thursday.
"The markets are entirely different and it would pay to travel to Mars as opposed to stay on Earth, because the returns here are very, very low," the manager of the Janus Capital Unconstrained Bond Fund, said on CNBC's "Power Lunch"."
Do any of you have a similar outlook? It seems to me as if the huge returns from the 60s to now have largely been due to advancements in computer technology (among other factors, no doubt). Computers have extended man's abilities to communicate and calculate, and essentially made man exponentially more efficient and capable. But, ultimately, the market cannot continually increase on speculation and quantitative easing alone... there has to be gains in fundamentals. But how can billion dollar conglomerates continue to improve their fundamentals year after year?
Perhaps I've become too skeptical, but given all the economic news, the fact that student loan debt has surpassed credit card debt, the vast amount of welfare... I don't see how the market engine can continue to run.
Thoughts?
"Bill Gross has some bad news for investors.
In his June investment outlook released Thursday, the widely followed bond fund manager contended that bond and stock returns realized in the last 40 years are "a grey if not black swan event that cannot be repeated." Investors should not expect 7 percent returns on bonds or returns in the high single digits or double digits on stocks, Gross told CNBC on Thursday.
"The markets are entirely different and it would pay to travel to Mars as opposed to stay on Earth, because the returns here are very, very low," the manager of the Janus Capital Unconstrained Bond Fund, said on CNBC's "Power Lunch"."
Do any of you have a similar outlook? It seems to me as if the huge returns from the 60s to now have largely been due to advancements in computer technology (among other factors, no doubt). Computers have extended man's abilities to communicate and calculate, and essentially made man exponentially more efficient and capable. But, ultimately, the market cannot continually increase on speculation and quantitative easing alone... there has to be gains in fundamentals. But how can billion dollar conglomerates continue to improve their fundamentals year after year?
Perhaps I've become too skeptical, but given all the economic news, the fact that student loan debt has surpassed credit card debt, the vast amount of welfare... I don't see how the market engine can continue to run.
Thoughts?
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18 comments
When the housing market crashed, we had the choice of letting the investment banks fail, or bailing them out (with taxpayer money), reducing interest rates to near zero, and pumping cheap money in with quantitative easing. The important point is that the stock market has been propped up by low interest rates and has nowhere to go but down. Didn't read Gross's article, but pretty sure that's the main point. As the Fed starts to raise rates, I would expect the market to go lower.
Of course, @Skibum will tell you that immigrants from Mexico are the problem. *sarcasm*
Seems to me you can own some real estate now and also a bond portfolio (hold 'em to maturity) as a hedge.
I'm not disagreeing with you one bit random.
I think Yellen wants to raise rates, but we had another bad jobs report. Still, I don't see how the market can go up from here. Fed really has brilliant people and they are doing their best.
With crappy job reports the Feds hands are tied, and I don't see anything on the horizon to change the job reports - at least not until early next year at the soonest.
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Yeah, good point, Meat. Especially for young investors. But if you're retiring soon, I might pay attention to a market that looks over-valued.
The point is ladies and gentlemen that greed, for lack of a better word, is good.
Sooner people can stop supporting this speculative economy the better.
And always remember that when things are crashing, don't walk under high rises. Walk in the center of the street if you need to pass.
SJG
Robin Trower- Record Plant, Sausalito, Ca 8/11/73
https://www.youtube.com/watch?v=42Y90fGP…