A Quote by Bill Gross
Both from the standpoint of stocks and bonds, an investor wants to go where the growth is.
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For all your long-term investments, such as retirement accounts that you won't touch for at least ten years, you need a mix of stocks and bonds. Stocks offer the best shot at inflation-beating gains. But stocks don't always go up. That's where bonds come into play: They have less upside potential, but they also do not pack the same risk.
Whether a tops-down or bottoms-up investor in bonds, stocks, or private equity, the standard analysis tends to judge an investor or his firm on the basis of how the bullish or bearish aspects of the cycle were managed.
In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy.
When growth is slower-than-expected, stocks go down. When inflation is higher-than-expected, bonds go down. When inflation is lower-than-expected, bonds go up.
When growth is slower than expected, stocks go down. When inflation is higher than expected, bonds go down. When inflation's lower than expected, bonds go up.
To finance deficits, the government must sell bonds to investors, competing for capital that could otherwise be used to invest in stocks or corporate bonds. Government borrowings raise long-term interest rates, stifling economic growth.
Both cheap value stocks and more glamorous growth stocks can work well in a portfolio - if done right.
The intelligent investor gets interested in big growth stocks not when they are at their most popular - but when something goes wrong.
A good portfolio is more than a long list of good stocks and bonds. It is a balanced whole, providing the investor with protections and opportunities with respect to a wide range of contingencies.
When I stand on my special-issue "Intelligent Investor" ladder and peer out over the frenzied crowd, I see very few others doing the same. Many stocks remain overvalued, and speculative excess - both on the upside and on the downside - is embedded in the frenzy around stocks of all stripes. And yes, I am talking about March 2001, not March 2000.
I don't want euro bonds that serve to mutualize the entire debt of the countries in the euro zone. That can only work in the longer-term. I want euro bonds to be used to finance targeted investments in future-oriented growth projects. It isn't the same thing. Let's call them 'project bonds' instead of euro bonds.
Rising interest rates are considered bad for stocks because they raise the cost of doing business and depress corporate earnings and because higher yields make bonds relatively more attractive than stocks to investors.
Time and again, in every market cycle I have witnessed, the extremes of emotion always appear, even among experienced investors. When the world wants to buy only [bonds], you can almost close your eyes and [buy] stocks.
A rentier is an investor whose relationship to a company or enterprise is strictly limited to the ownership of financial wealth (such as stocks or bonds) and the receipt of income on that wealth (such as dividends or interest). The financial system performs dismally at its advertised task, that of efficiently directing society's savings towards their optimal investment pursuits. The system is stupefyingly expensive, gives terrible signals for the allocation of capital, and has surprisingly little to do with real investment.
Suppose you were a real estate investor with a 1/3 interest in the best apartment complex in town, the best mall, and the best office building. Would you feel like a poor, undiversified investor? No! But as soon as you get into stocks, people feel this way. Partly, people need to justify their fees.
When it comes to selling stocks, it is plain that nobody can sell unless somebody wants those stocks.If you operate on a large scale you will have to bear that in mind all the time.
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