Citing Annie Dillard author of Pilgrim at Tinker Creek
, and using metaphors such as male and female mantises during mating rites, Bill Gross published his January 2011 Investment Outlook entitled Off With Our Heads! It is much easier to read as compared to some of his earlier monthly writings. You can read the whole thing here, but here is his investment advices:
, and using metaphors such as male and female mantises during mating rites, Bill Gross published his January 2011 Investment Outlook entitled Off With Our Heads! It is much easier to read as compared to some of his earlier monthly writings. You can read the whole thing here, but here is his investment advices:
- An astute mantis-like investor must defer immediate gratification, make a 180Ëš turn from that sexy looking female with those long green legs (long term bonds) and mend his ways fast! It is still possible to earn an attractive return from bond strategies (such as PIMCO’s Total Return strategy in 2010), and the way to do it is to focus on “safe spread” that emphasizes credit, as opposed to durational risk.
- These “safe spreads” include: emerging market corporates and sovereigns with higher initial real interest rates and wider credit spreads; floating as opposed to fixed interest obligations; and importantly currency exposure other than the dollar.
- For those inclined to lunch on stocks, remember to go where the growth is – developing as opposed to developed markets. If the U.S. must pay an eventual price for mindless deficit spending, then find countries and currencies that appear to have their act under control: Canada, Brazil, and yes even Mexico with its drug related violence. Mexico has a net national savings rate that exceeds our own by 20% of GDP.
- Above all, remember that all investors should fear the consequences of mindless U.S. deficit spending as far as the mantis eye can see. Higher inflation, a weaker dollar and the eventual loss of America’s AAA sovereign credit rating are the primary consequences. Fear your head – fear your head.
