From PIMCO via Research Recap:
The latest monthly letter from PIMCO’s Bill Gross, makes for depressing reading, especially for those who make their living off other people’s money.Gross writes that it ” is probable that trillion-dollar deficits are here to stay because any recovery is likely to reflect “new normal” GDP growth rates of 1%-2% not 3%+ as we used to have. Staying rich in this future world will require strategies that reflect this altered vision of global economic growth and delevered financial markets. Bond investors should therefore confine maturities to the front end of yield curves where continuing low yields and downside price protection is more probable. Holders of dollars should diversify their own baskets before central banks and sovereign wealth funds ultimately do the same. ”
Of one thing you can be sure however: over the next several decades, the ability to make a fortune by using other people’s money will be a lot harder.All investors should expect considerably lower rates of return than what they grew accustomed to only a few years ago. Staying rich in the “new normal” may not require investors to resemble Balzac as much as Will Rogers, who opined in the early 30s that he wasn’t as much concerned about the return on his money as the return of his money....MORE
So when I saw this morning's post at MarketBeat "Wharton’s Siegel: ‘A Time to Buy’':
...The operative question Robert Siegel put to the author of the book “Stocks for the Long Run” was this: Exactly how long a run are we talking here?:I added my two cents worth:The professor pointed out dividends on stocks can be an attractive play for investors today, but also said that he’s not expecting another major shoe to drop in the markets....MORE
Prof. SIEGEL: I’m virtually sure that it’s not going to be a long wait. And the reason is we’re no longer at high points in the market. In March, we were down more than 50 percent. And I looked all the way back last hundred years. Once you’re down 50 percent, your prospects are very good.
SIEGEL: You’re saying that the market dropped by so much over the past year that you’re saying, surely, this must have been the bottom back in March.
Prof. SIEGEL: Even in December of 1930, where you were 50 percent down from that all-time high in 1929, your five-year return was more than seven percent after inflation. The world looks different once you’re down as much as we have been down.