Bill Gross and the dying cult of equity
Tuesday's page in The New York Times had a column by Andrew Ross Sorkin in which he quotes Bill Gross, the founder of Pimco, saying, "The cult of equity is dying."
Why do people say stuff like this?
First of all there is a bad precedent. In 1979, there was a famous Business Week cover called "The Death of Equities." Later I heard it cited by stock analyst as a fabulous indicator that it was time to buy equities. His reasoning was that when the market is so bad that its badness makes the cover of popular magazines, most of the downward trend is over.
But what's most odd about Gross's comment is that the trend hasn't been downward. Look at the Dow Jones Industrial Average. It's above 13,000--double what it was at the bottom of the crash in 2009 and within 1,000 points of its all-time high of 14,164 on October 9, 2007. I keep reading gloom; on Real Clear Markets one article warns of a stock correction "or worse," another of 'Nine reasons Facebook will crash." Blah, blah, blah. It's fun to scare people, and sometimes you are right. But the fact is, the equity market has gone up for three years. Dying? It's not dead.
Achenblog by Joel Achenbach
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