Stock Investing Dead?


    It is time to write the obituary for stock investing as we know it, says Bill Gross, the co-founder and co-chief investment officer of PIMCO. In his investment outlook for August, he says lower returns on stocks and bonds means individuals will have to work longer to save for their retirement. “If financial assets no longer work for you at a rate far and above the rate of true wealth creation, then you must work longer for your money,” he writes. He says the expectations of a 6.6 per cent real return “belied a commonsensical flaw much like that of a chain letter or yes – a Ponzi scheme. If wealth or real GDP was only being created at an annual rate of 3.5 per cent over the same period of time, then somehow stockholders must be skimming three per cent off the top each and every year. If an economy’s GDP could only provide 3.5 per cent more goods and services per year, then how could one segment (stockholders) so consistently profit at the expense of the others (lenders, labourers, and government)?”