The Death of Equities…The New Norm in Growth…Forget Retiring…Learn to Live with Less………………………
Sound like the headlines to be expected on sites promoting the buying of gold or silver bars, ankle biters or survival gear? Well maybe, but in fact these are the recent comments (paraphrased) out of market sage Bill Gross of Pimco.
There’s actually quite a bit more that the Bond King pontificates on that is worthwhile to ponder— I’d suggest giving it a good gander.
Now the immediate response of most is to surmise he’s simply punkin equities and trying to encourage the masses to abandon stocks and pile into bonds when he states that “the cult of equity is dying.”
Not so… He’s not pimpin treasuries, but instead spends much time dissing and dismissing bonds (his words…seems Bill is a closet hipster…). This shouldn’t be surprising given the steady diet of “bond bubble” commentary he’s offered over the past several years…and the fact we’ve got record low yields for U.S. treasuries that are knuckle-scraping the donut (“0”).
Basically what Gross is saying is that we’re all screwed as investors and that we better get used to this “new norm” for some time to come. Oh yeah, and that you might wanna keep that resume updated well into your sixth, seventh and eighth decades—seems you’re gonna be spending your golden years working for the Golden Arches…or greeting shoppers or continuing to toil in your current profession…at least till they dump ya or outsource your job for purposes of cost savings (which in theory should benefit you as a shareholder…doh!)
It’s really the “new” circle of life that he’s describing…you start off working for minimum wage and then fight for decades to climb the ladder—all the while doing your duty as a good citizen, contributing to our economy by means of gluttonous consumption fueled by leveraging yourself to the hilt…and beyond— only to end up back at minimum wage during the sunset years…
Yeeeiiiiikkkkkkeeeesssssssssssssss. Geriatric job fairs….not a pretty picture. Fidelity, Schwab and the like will all become job placement specialists in addition to acting as custodians for your grossly underfunded nest eggs… Pity the marketing fools who’re gonna be tasked with creating ad campaigns promoting that mess….
But I digress…
Back to the reality of what IS really going on…and in fact has been for some time. Gross is right in my view—buy and hold equity investors are likely to experience some serious disappointment going forward…much the same view looking ahead as the disappointing view in the rearview mirror.
Does that surprise anyone here though? The buy and hold model of equity investment has been punk for quite some time. I could spout off statistics till we all fall asleep (which is likely to happen if I go over another 100 words), but do you really need them to know the marquise indices have gone nowhere over the past decade plus? Or that there have been a number of decade-plus periods of sub-par returns (dare I say crappy) for those investing in equities?
Big deal is my response. If buy and hold worked, we’d all just lay down some positions and that’d be it…you wouldn’t be here, nor would Preston, Karson or anyone else. I’d be on my beach this very minute scoping waves…amongst other things…
Cutting to the chase, we’re all here because we do believe there’s money to be made…but you have to be proactive in obtaining it. Be it swing or day trading, weekly or monthly options, trading indices, currencies and other commodities, we all share the knowledge that in fact the markets travel a pretty good clip in any given day, and certainly over time. The levels may look the same as a decade or more ago, but much ground has been chewed up and distance covered.
Don’t know about you, but that equates to opportunity to me. Recognizing this provides an edge in- and- of-itself. As does utilizing a solid trading system that leverages well-chosen strategies specifically implemented to capitalize on situations or conditions offering favorable probability outcomes. More simply stated, trading opportunities that stack the odds in my favor if I trade them in disciplined fashion…opportunities that are oft present in the market.
Bottom line, Gross’ comments, while juicy and great fodder for the talking heads on the airwaves, mean not much at all in this neck of the woods…other than to make the case for proactively taking control of your own money and seeking to leverage opportunities that are always present in the market. For those not willing to do so, take heed—his comments should serve as a wake-up call—keep that resume updated!
~L