PIMCO’s Bill Gross wins for the most depressing forecast of the afternoon.
Getting rich as a hedge fund manager is a thing of the past, says Gross. Druckenmiller’s exit was like a punctuation point at the end of an era.
It’s all very dramatic, the way Gross explains it, though the reality is much more boring.
The hedge fund industry mogul saw the industry changing, saw performance lag, and has no hope that it will come back anytime soon. That’s why Druckenmiller left Duquesne.
Gross told Bloomberg he thinks it’s because Druckenmiller forecasted the end of a time when hedge fund managers can make a lot of money.
“Future investment returns will be far lower than historical averages.”
And because we’re just like Japan.
“If bond investors believe that the resplendent and abundant capital gains of the past 25 years will be duplicated from yield levels of 2 to 3 per cent — well, they just haven’t been to Japan, have they?”
PIMCO’s gone back and forth on their predictions of inflation vs deflation, but here it seems the firm’s CEO is siding with the deflation camp.