Bonds are ‘investment garbage’ just like cash: Bill Gross

Posted by Ye Xie,

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Bill Gross is talking trash about the bond market — literally.

In a meandering and sometimes off-kilter investment outlook posted on his website, the onetime bond king said longer-term Treasury yields are so low that the funds that buy them belong in the “investment garbage can.”

Ten-year yields traded at 1.29 per cent as of 6:07 a.m. in New York. They are likely to climb to 2 per cent over the next 12 months, handing investors a loss of roughly 3 per cent, he wrote. Stocks could also fall into the category of “trash” should earnings growth fall short of lofty expectations.

“Cash has been trash for a long time, but there are now new contenders,” said Gross, who co-founded Pacific Investment Management Co. in the 1970s and retired in 2019. “Intermediate to long-term bond funds are in that trash receptacle for sure, but will stocks follow? Earnings growth had better be double-digit-plus or else they could join the garbage truck.”…read more.