PRNewswire/ -- Legendary bond and fixed income investor William H. (Bill) Gross today released a new Investment Outlook, "Wall Street Playbill".
In this latest Outlook, Mr. Gross writes that it will be extremely difficult to return to the Fed's historic 2% inflationary target. Higher than 2% inflation has been required to keep the U.S. and global economies growing, which in turn have been required to maintain healthy asset markets, which increasingly is the target for Fed policy despite Chairman Powell's denials, Mr. Gross says.
Rather, Mr. Gross believes investors should invest with expectations for 3%-plus annual CPI gains. He recommends owning TIPS versus nominal Treasuries, and include commodities in a portion of their diversified portfolios.
They should focus on companies with the capacity to raise prices and maintain margins in an inflationary environment. He also likes regional banks, whose stocks are down 30% to 40% following the Silicon Valley Bank failure.
Mr. Gross writes: "Admittedly, regionals will have their cyclical problems if and when a recession occurs but my long-time wish to own a bank is now possible via public markets.
Recent ROEs of 9%-10% at 60% of book provide an enticing long-term investment. Many smaller regionals may be gobbled up by larger counterparts at premium-to-market bids."
Bill Gross has been a pioneer in fixed income investing for more than 40 years. He co-founded PIMCO in 1971 and served as managing director and chief investment officer until joining Janus Henderson Investors in 2014. He retired in 2019 to focus on managing his personal assets and private charitable foundation.
Throughout his career, he has received numerous awards, including Morningstar Fixed Income Manager of the Decade for 2000 to 2009 and Fixed Income Manager of the Year for 1998, 2000 and 2007. Mr. Gross became the first portfolio manager inducted into the Fixed Income Analysts Society's Hall of Fame in 1996 and received the Bond Market Association's Distinguished Service Award in 2000.
In 2011, Institutional Investor magazine awarded him the Money Management Lifetime Achievement Award. Mr. Gross oversees the $390 million-asset William, Jeff and Jennifer Gross Family Foundation, which annually donates up to $21 million to non-profits involved in humanitarian causes, health care, and education.
For more information or to view Investment Outlook archives, please visit https://williamhgross.com. For information about Mr. Gross's philanthropic activities through the William, Jeff and Jennifer Gross Family Foundation, please visit https://grossfamilyfoundation.com/. Order his new book "I'm Still Standing: Bond King Bill Gross and the PIMCO Express" on Amazon.com.
By PRNewswire
April 21, 2023
