What the End of the Bond Bull Market Means for Investors

It’s been a while since I read Bill Gross’ monthly
Investment Outlook.

If you don’t recall Bill Gross is one of the most
influential fund managers in the world. As the founder and CEO of PIMCO,
he oversees around $1 trillion in assets. Ad he personally runs the PIMCO
Total Return Fund, with assets above $500 billion.

Gross is a bond guy. And he’s done quite well over the
years, posting consistent annual returns in the 8%-10% range.

But in Gross’ latest Investment
, he calls the end to the 30-year bond bull market,
and an end to his fund’s remarkable performance.

It’s not often investors get such a candid assessment
from a fund manager. And while we mustn’t rule out the possibility that
Gross is “talking his book” or lowering expectations so he can later
exceed them, I highly recommend Daily Profit readers
give his monthly missive a read.

Here’s the link http://www.pimco.com/Pages/RunTurkeyRun.aspx

This is perhaps the most cogent and readable explanation
of the current political and economic climate in the

New unemployment claims fell by 21,000 for the latest week. Continuing claims fell by
122,000 to 4.36 million. That’s the fewest since November of 2008.

The number of unemployed who have been collecting
unemployment on emergency extensions of benefits approved by Congress
also fell by 414,000 to 4.66 million.

This is good news for the labor market and the economy.
It will be very interesting to see how nonfarm payrolls come in next
week. Estimates are that payrolls rose by 45,000.

But today’s initial claims data makes it seem as though we might get an
upside surprise.

In case you’re
wondering why the major indices went negative after the better than
expected continuing claims data, you have to remember that when new
stimulus is on the table, bad news is good and good news becomes

So when we hear that unemployment data may be improving,
it suggests that maybe the Fed won’t feel the need to add as much new
liquidity as was previously thought.

It’s twisted I know. But remember, the stock market
isn’t just about the economy. It’s about making money. Sure, more
employed people means that revenues and profits should improve. But
massive stimulus accomplishes the same thing, only quicker.

I know we just
did reader mail yesterday, but I received a letter from a Daily
reader that needs a response.

I keep reading your articles because I think you
have the ability to let common sense rule and not your emotions. I am
learning a lot. …I’ve been reading your emails for about 2 years. I am
sort of nervous about the economy as a whole. I really hope that it
doesn’t completely come apart at the seams. The entire scenario seems

I get nervous because I read other emails about how
US is going to default on treasury bills. Ian, do you think the economy
could completely fall apart? Last night I heard a women saying on the
radio that the
government is looking into confiscating everyone’s
401K’s. Can they really do this? This is the 2nd time I’ve heard/read
about this. I don’t know, I get the creeps sometimes.

Keep up the good work. I will continue to learn more
before I really start doing some investing. I bought Ford at $2.66. Not
many shares because I don’t have lots of money. They did really good so
far. Thanks for your help in understanding what goes on.

Nice work on Ford! You’ve got some excellent gains

Now as far as the government confiscating 401K accounts,
this rumor is absolutely false. It is fear-mongering of the worst kind.
We all know that stretching the truth is politically useful, but to go to
these lengths is reprehensible.

While there’s a lot to be upset about, this is not one
of them. If you want to read more, I found this article at FactCheck.org


Of course, I’d like to hear your thoughts. I’ll even
print them. Write me here: [email protected]

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