Bond Investing

Bill Gross, King Of The Bond World, Tells Us To "Avoid Bonds" Why would he tell us to avoid the very investment he specializes in?

Over the weekend, I saw in the newspaper that 90% of new money going into mutual funds this year has gone into bond funds vs. stock funds. Investors are showing that they are willing to take some risk, but they aren't quite ready to go back into the markets.

But not so fast, says Bill Gross. (For those of you not familiar with Bill Gross, he is the managing director and chief investment officer of PIMCO funds. He made his mark with PIMCO's Total Return Bond Fund, now one of America's largest mutual funds.)

In an article published in Investment News (http://tinyurl.com/yakyzl9), Mr. Gross says that

"You want to look for stability of income and growth. That probably doesn't mean bonds."

He's basically telling us that bonds no longer offer a reasonable return for the risk taken, and he's been reported in other publications on the difficulty of making money in bonds in a rising interest rate environment that is likely coming before long.

But this is very interesting that he is telling us to avoid that which made his career, the bond market. I don't know about you, but this sounds like advice that we should listen closely to.

By the way, if you follow market history closely, you will find that Americans are really good at putting money in the wrong place when they do so en masse. If 90% of the new money is going to bonds, that could be a very good signal for stocks in the near term.

You couldn't ask for a much more bullish sign, at least, historically speaking. The only problem with history and the markets is that just when you think you've got it all figured out, the markets have a tendency to turn around and slap you around