Stock Is Dead?
Bill Gross says the 'cult of equity is dying.' Is he right?
Bill Gross' name may be synonymous with bond investing, but PIMCO's co-founder and CIO isn’t shy about weighing in on equities. During the keynote address that kicked off the 2011 Morningstar Investment Conference, Gross suggested that, with interest rates at anemic levels and with inflation essentially having nowhere to go but up, income-seekers should favor high-quality dividend-paying stocks over most flavors of fixed income. Gross mentioned energy concern Southern Company (SO) as one contender for investment dollars that might otherwise flow to fixed income. He also gave Johnson & Johnson (JNJ) a buy rating in his guise as an equity analyst.
Some in the audience seemed surprised by Gross’ equity-centric comments, but that probably owed to his candor about the prospects for bonds. When the manager of PIMCO Total Return (PTTRX)--with assets in excess of a quarter trillion dollars--touts stocks over bonds, that's newsworthy even if the suggestion he made seemed merely sensible at the time.
Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.