In Case You Weren’t Sure, Here’s More Evidence All Assets Are Overvalued

Bill Gross, the co-CIO & founder of Pacific Investment Management (PIMCO), has written an energetic indictment against the current false rally. In his November Investment Outlook he indicates that “almost all assets appear to be overvalued on a long-term basis.” 

He describes the series of economic bubbles that have been repeatedly inflated and popped writing that, “the U.S. and most other G-7 economies have been significantly and artificially influenced by asset price appreciation for decades.” He specifically points out that there was not actual wealth creation, but asset appreciation “as opposed to the production of goods and services.”

Gross continues, acknowledging that policymakers recognize, “the virus has infected far too many parts of the economy’s body, for far too long, to go cold turkey.” So, they continue with “quantitative easing and near-0% short-term interest rates” that result in “an economy barely above the grass as opposed to buried six feet under.”

His closing statement really says it all… “Rage, rage, against this conclusion if you wish, but the six-month rally in risk assets – while still continuously supported by Fed and Treasury policymakers – is likely at its pinnacle. Out, out, brief candle.”

The investment outlook came to our attention via The Pragmatic Capitalist and the full commentary on overvalued assets everywhere is worth a read.