“I Don’t Like Bonds, I Don’t Like Most Stocks”: Bill Gross, According to Reuters

By Jennifer Ablan

NEW YORK (Reuters) – Investors are urged to reduce their risk exposure by shifting investments into real assets and to brace for lower returns, as the market environment no longer supports double-digit gains in a zero interest-rate climate, according to Bill Gross, a portfolio manager at Janus Capital Group.

"Increasing chances of negative returns and principal losses exist across many asset categories unless nominal growth rates improve to acceptable levels," Gross stated in his latest Investment Outlook note released on Wednesday.

Gross expressed a lack of confidence in various asset classes, saying, "I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets like land, gold, and tangible plant and equipment available at a discount are the preferred options."

These remarks come in light of the recent surge in the benchmark Standard & Poor’s 500 index and a rally in the Treasury bond market.

The sentiment echoed comments made by Jeffrey Gundlach, CEO of DoubleLine Capital, who recently remarked, "Sell the house, sell the car, sell the kids. That’s exactly how I feel – sell everything. Nothing here looks good."

Gross, who manages the $1.5 billion Janus Global Unconstrained Bond Fund, noted that capitalism struggles to operate efficiently at zero-bound interest rates. He explained that while low rates might inflate asset prices, they undermine savings and liability-driven business models.

"Banks, insurance companies, pension funds, and everyday people are losing their ability to manage future debts and retirement benefits,” he said. “Central banks appear unaware of this detrimental aspect of prolonged low interest rates. If sustained too long, the real economy suffers as anticipated income vanishes and investment slows."

Overall, Gross argued that global monetary policies rely on nominal growth for success. "Nominal growth is vital as it enables nations, companies, or individuals to service their debts with rising income, allocating part to interest expenses and the rest for principal repayment,” he explained.

"Without that, a credit-based economy inevitably deteriorates into Ponzi finance and risks collapse. Keep an eye on nominal GDP growth," Gross emphasized.

He indicated specific growth targets for different regions: a nominal GDP growth of 4-5% in the United States, 3-4% in the euro zone, and 2-3% in Japan.

Currently, the Janus Global Unconstrained Bond Fund has risen over 4% this year, outperforming more than 69% of its peer group, according to Morningstar.