Bill Gross said the bull market \”supercycle\” for bonds and stocks is approaching its end, because the unconventional monetary policies that have kept it alive since the financial crisis are set to end.
The attempt by global central banks to cure a debt crisis with more debt does not have much further to operate, which will end a rally that\’s lasted 3 . 5 decades, the 71-year-old manager wrote within an investment outlook for Janus Capital Group Inc. Investors should stop concentrating on price appreciation and instead look to \”mildly levered income,\” for example his recommendation to short German government debt, he explained.
Credit-based oxygen is running out
\”Credit-based oxygen is running out,\” Gross wrote within the outlook, titled \”A Feeling of an Ending,\” in which he compared the ultimate stages from the market cycle with his own mortality. \”I merely have a sense of an ending, a secular bull market ending having a whimper, not a bang.\”
Gross, the manager from the US$1.5 billion Janus Global Unconstrained Bond Fund, acknowledged that his calls for the end of the text rally both in February and April of 2013 were too soon. This time around, he noted that he\’s in prominent company, as investors including Stanley Druckenmiller, George Soros, Ray Dalio and Jeremy Grantham have cautioned that financial markets may be overpriced or bubbly, potentially setting the stage for lower returns.
Gross, who referenced Julian Barnes\’ novel \”The Sense of an Ending\” in his outlook, said he is constantly on the see a subdued rate of interest environment for a prolonged span. He advised investors recently to leverage returns in an environment of persistently low interest and inflated asset prices.