Warning of a pullback must be the safest bet for any stock market prognosticator these days.
The odds right now favour some degree of market decline in the near future, given the sharp rally we’ve had. Thus any valid bear must be arguing for a substantial pullback, one which would make equity buyers over the last few months look foolish.
Whipping out his latest Barney Fife sound bite, Bill Gross appears to do just that. He’s also bearish on some corporate debt.
Bill Gross (PIMCO): “We look at the markets in the last twelve months as a sort of Will Rogers, Barney Fife type of comparison. Twelve months ago the world was concerned about the return of its assets, as opposed to the return on its assets. And now we’ve got a Barney Fife market… goofy, speculative, running far too high”
Robert Doll (Blackrock): “I still think markets should be looked at as glass-half-full…. [policy makers] are applying all kinds of emphasis to continue to stimulate, and as long as they are focused on stimulus I think that’s the sweet spot for the markets, and then of course there are so many people on the side lines with a ton of cash waiting for that proverbial pullback”
We feel more in the Robert Doll camp… cognisant that the rally has probably gone too far, but also aware that this market is nowhere near foolish levels, relative to history.
Mr. Gross’s full argument is in the video below.
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