Bill Gross manages the world's largest bond fund at Pacific Investment Management Company (PIMCO).
Gross suggests that the United States is entering a new era of higher savings, lower consumption and lower economic growth that could last as long as a generation.
Gross recommends that investors "stress secure income" in this new environment. Recommended sources of secure income include bonds and dividend paying equities:
Higher savings, lower consumption and annual economic growth of about 2 percent, as opposed to 3.5 percent, may last a generation or more, meaning investors should “stress secure income,” Gross, who helps oversee about $756 billion as co- chief investment officer at Newport Beach, California-based Pimco, said today in his July note to clients.
“‘Non Appétit,’ not Bon Appétit, will become the apt description for the American consumer, and significant parts of the global economy, including the U.S,” wrote Gross, whose Total Return Fund ranks in the top 1 percent of similar portfolios in the past five years. “It promises to persist for a generation at a minimum.”
Source: Bloomberg
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