Bill Gross has penned a succinct and worthwhile heads-up-primer for his June monthly letter. See: How to Make Money. After 8 years of near zero rates and $8 trillion in global QE indiscriminately bidding up asset prices everywhere, it’s important to hold fast to cycle and valuation bearings, lest we too succumb to financial suicide with the masses. Here’s a snippet:
Because of the secular headwinds facing global economies, currently labeled as the “New Normal” or “Secular Stagnation”, investors have resorted to “making money with money” as opposed to old-fashioned capitalism when money and profits were made with capital investment in the real economy.
…But don’t be mesmerized by the blue skies created by central bank QE and near perpetually low interest rates. All markets are increasingly at risk.
Money will currently be made, or at least conservatively preserved, by acknowledging the exhaustion of “making money with money”. Strategies involving risk reduction should ultimately outperform “faux” surefire winners generated by central bank printing of money. It’s the real economy that counts and global real economic growth is and should continue to be below par.
