Bill Gross is tired of what he reads in the news.
He’s also tired of central bank policies that have kept interest rates, in his view, artificially low.
These two are somehow related.
In his latest investment outlook, Janus Capital’s Gross begins with six science facts that he thinks are amazing, which include:
- Velocity and gravity can make time stand still.
- The universe has trillions of identical but separate twins.
- Scientists have shown that “particles” can suddenly appear out of nothing — even a vacuum — and then disappear again into nothingness.
- Something can either be here or not here, depending on whether you’re looking.
- Carbon and all the heavier elements of which we are composed (a little gold by the way) were manufactured or cooked by Supernova stars at tremendous heat.
- Dark Matter — So 2/3 of the universe is made up of dark matter — matter that supposedly doesn’t emit or reflect light.
Gross then says that for Fox and CNN, everything is breaking news, even if all of these facts aren’t.
But broad point that Gross makes in his outlook, which is something he’s reiterated time and again, is that central bank policies of keeping interest rates low have distorted financial markets and eventually, this will play out poorly.
In Thursday’s outlook, Gross goes so far as to reference runaway bouts of inflation seen in Argentina, Venezuela, and Zimbabwe as examples of what happens when people lose faith in a country’s currency, with the criticism here being that all central banks currently have backing them up.
But then again, this is how modern banking works. So.
As for what to do with investments, Gross thinks 2016 is a time to take risk off th table. Gross writes: “
Less credit risk, reduced equity exposure, placing more emphasis on the return of your money than a double digit return on your money. Even Martingale casinos eventually fail. They may not run out of chips but like Atlantic City, the gamblers eventually go home, and their doors close.”