Why Bill Gross Should Stick to Bonds

The bond guru predicts that over the long haul stocks will earn just 1% annualized after inflation. I think he’s flat-out wrong.

In an infamous 1979 cover story, BusinessWeek magazine predicted "The Death of Equities." The story was published about six months before the beginning of a bull market and just three years before the start of the greatest run-up in stock market history.

Duly chastened, even the most bearish mainstream analysts -- and journalists -- have since refrained from making similar boneheaded predictions. Until now. Bill Gross -- manager of Pimco Total Return (symbol PTTDX), the nation's largest bond fund, with $270 billion in assets -- begins his new monthly outlook by proclaiming: "The cult of equity is dying."

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.