DavidS
Anti-Tea Party Member
NEW YORK, Dec 2 (Reuters) - Bill Gross, the manager of the world's biggest bond fund, recommended on Tuesday owning corporate bonds rather than equities because the hobbled economy is crimping companies' profits. "Better to own corporate bonds than corporate stocks," Gross, chief investment officer of Pacific Investment Management Co, or Pimco, wrote in his December Investment Outlook letter.
Extensive government intervention in banking and other sectors of the economy in response to the global financial crisis has reduced corporate America's ability to generate profits, Gross argued.
"I believe in stocks for the long run -- but only if purchased at the right price," or "from a starting price that correctly anticipates the economy's growth and its share of after-tax corporate profits within it," he wrote.
Gross, who manages the $127 billion Pimco Total Return Fund and helps oversee the more than $790 billion in assets under management at Pimco, noted that six years ago he had forecast that the Dow Jones industrial average .DJI would fall from 8,500 points to 5,000 points. Instead, the Dow rose to a peak around 14,000 points in October 2007. This month's Investment Outlook is entitled "Dow 5,000 Redux," but Gross cautioned this doesn't imply he is now forecasting the Dow will fall to 5,000 points.
UPDATE 1-Pimco's Gross prefers corporate bonds to stocks | Markets | Bonds News | Reuters
Extensive government intervention in banking and other sectors of the economy in response to the global financial crisis has reduced corporate America's ability to generate profits, Gross argued.
"I believe in stocks for the long run -- but only if purchased at the right price," or "from a starting price that correctly anticipates the economy's growth and its share of after-tax corporate profits within it," he wrote.
Gross, who manages the $127 billion Pimco Total Return Fund and helps oversee the more than $790 billion in assets under management at Pimco, noted that six years ago he had forecast that the Dow Jones industrial average .DJI would fall from 8,500 points to 5,000 points. Instead, the Dow rose to a peak around 14,000 points in October 2007. This month's Investment Outlook is entitled "Dow 5,000 Redux," but Gross cautioned this doesn't imply he is now forecasting the Dow will fall to 5,000 points.
UPDATE 1-Pimco's Gross prefers corporate bonds to stocks | Markets | Bonds News | Reuters
