Bill Gross on Thursday released his first investment outlook since joining Janus and addressed the elephant in the room right away: Why did he leave PIMCO?
While he admitted he wouldn’t reveal everything, he ultimately revealed little, writing, “slowly and with great hesitation, I came to understand that it was time for me to leave. It happens sometimes to founders!”
Gross called his move to Janus a “return to a simpler role, completely focused on markets, investment performance and serving my clients,” adding, “I am not ready to retire, so here I am.”
As he moved on to his outlook on the markets, Gross compared the markets that aren’t U.S.-bond and equities to the final stages of a “1920s marathon with partners clinging to each other in a desperate attempt to keep from falling down,” as many economies are struggling with the beginning of a recession or facing an impending one.
His advice is to get used to it. “There is a new financial era. Accept it and modify your behavior accordingly, so that your future is safe, secure, and you look forward to a brighter tomorrow,” he wrote.
The problem is financial markets are artificially priced, according to Gross, and now that we’ve had our feast years, we’re due a famine “almost by mathematical necessity.” He predicted bonds could reach 3% or 4%—“at best”—with stocks at 5% or 6%.
In a webcast on Thursday with Dick Weil, CEO of Janus, Gross said monetary authorities have done a “decent job” of keeping interest rates down for a long period of time so that “financial markets didn’t implode” and so stock prices can rise.