Gross: Another 10% Drop Ahead

“More negative numbers lie ahead and if you define a bear market by a 20% correction, at some point — that’s six to 12 months — we’ll have a classic definition of a bear market, meaning another 10% downside.”

Bill Gross, manager of the $1.4 billion Janus Global Unconstrained Bond Fund, said the whipsaw market reaction to the lackluster US jobs report [on Friday, October 2, 2015] shows that markets, especially stocks, high-yield bonds and some emerging market debt, are trading like a casino. [He believes] cash is the best bet until investors get a better view at what the Federal Reserve and the economy are going to do.

“Cash doesn’t yield anything but it doesn’t lose anything,” so sitting it out and making 25 to 50 basis points [0.25% to 0.5%] in commercial paper compared to 4% to 5% in risk assets is not that much of a penalty, he said. “Investors need cold water splashed on their face and sit out the dance.”

— Excerpt contributed by Jason Kelly

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Z-val: Bill Gross
Via: Bloomberg
Date: 10/2/15
Disposition: Medium-Term Bearish
S&P 500 on 10/2/15: 1951
S&P 500 on 4/4/16: 2066
Change: +5.9%
Judgment: Wrong

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2 Comments

  1. David Wollover
    Posted October 12, 2015 at 1:03 pm | Permalink

    Bill Gross bled money at PIMCO with his repeated erroneous calls (most on direction of interest rates). It would suggest you take his advice and reverse it. “Trading like a casino” … my how original an insight is that … “Investors need cold water splashed on their face and sit out the dance.” What a howler is this has-been. If you can show evidence this guy made a dime profit in the last three years, I will retract all this protestation to giving an iota of credence to B.G.

    • Posted October 14, 2015 at 11:53 am | Permalink

      You’re right to be skeptical, David. The point of this ongoing survey is to demonstrate the 50% mistake rate of forecasting at work in current media. Gross is no better than a coin toss; neither is anybody else.

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