Bill Gross on the Trump Mirage
Will Rogers once said, “”I am not so much concerned with the return on capital as I am with the return of capital.” Billionaire fund manager at Janus Capital (JNS), Bill Gross likes what Rogers said and finds it totally appropriate and applicable in present day context. For 2017, Bill Gross’ March 2017 investment outlook has just one big, bold advice for investors: “Be more concerned about the return of your money than the return on your money.”
As elaborated in Part 3 of this series, central bankers in today’s world are walking the fine line, pressurized with the task of maintaining interest rates that are just right for the economy. The financial system is already very highly leveraged and central bankers, globally (ACWI) (VTI), are left with limited tools for repair and restructure at their disposal to avert any subsequent financial crisis.
Don’t be allured by the Trump mirage
The U.S. President, Donald Trump’s pledge of getting his economy to a 3-4% growth range through tax cuts and deregulation, is nothing short of a mirage to Bill Gross. “Don’t be allured by the Trump mirage,” said Bill Gross to investors. Gross’ reason for calling 3-4% US growth rate, a mirage, is simple. The US economy (SPY) (IWM) (QQQ) is already at full capacity. So, it may be quite a challenge to stimulate an economy that is already operating at full-tilt. “We’re stuck in a 2% real GDP world, no matter what the fiscal stimulation, and what the deregulation,” said Bill Gross at a Bloomberg Surveillance interview in February.
Bottom line: be more concerned about the return of your money than the return on your money in 2017 and beyond.