Are Stocks and Bonds Dead?

The November 26th issue of Time magazine carries an article by Rana Foroohar focusing on Bill Gross and Mohamed El-Erian, PIMCO executives, who are frequently quoted about the market outlook and reasons why they are both so pessimistic.  Gross and El-Erian don’t differ all that much from Grantham’s On The Road To Zero Growth projections.

Quoting from the Time article, “Gross recently stunned the markets by calling equities a Ponzi scheme and warning investors they will never see 6% real returns again and would be lucky to get 3%.  Gross and El-Erian believe there will ultimately be a price to pay for the Fed’s money infusion in the form of return eroding inflation and other economic distortions.  When that happens, real growth (already sluggish) will stagnate further, borrowing cost will skyrocket, stocks will swoon, real estate will struggle and consumers will hunker down.”

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