Bill Gross On The Impact That Low Interest Rates And A Heavy Debt Burden Will Have On Pension Fund Returns!
Bill Gross, former head of the PIMCO Total Return fund who oversaw over $2 trillion in assets and is now with Janus, is worth listening to when he speaks!
And speak he did in a recent Bloomberg interview with Trish Regan that provided the following quotes representing some of the key takeaways from the man known as the ‘Bond King’!
- “Not even thin gruel is being offered to our modern-day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate.”
- “The interest rate can’t be raised substantially even over the next two to three years.”
- “The US has escaped the liquidity trap that euroland and Japan are in. But, not necessarily for all time.”
- “[Low interest rates] keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent. It destroys business models. It’s destroying the pension industry and in the insurance industry.”
- “ultimately, [low interest rates] destroy the capitalistic model at the margin. Instead of investing in the real economy, [corporations] can now simply borrow at close to 0 percent and buy their own stocks, which yield 2 or 3 percent on a dividend basis and provide a return of 6 or 7 percent on an earnings to price ratio basis.”
Written by Michael Haltman, President of Hallmark Abstract Service, New York.
HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.
And, for anyone either buying a property or refinancing, remember that although your attorney will likely recommend a title insurance provider you always have the right to choose your own (click here to learn more)!
If you have any questions you can reach Michael by email at email@example.com.Google+