Gross: "New normal' may be to avoid bonds

Instead, he suggests that investors look to dividend-paying stocks

Oct 4, 2009 @ 12:01 am

By Dan Jamieson

In the “new normal” of slower economic growth and lower investment returns, Pacific Investment Management Co. LLC's Bill Gross is himself buying steady, dividend- paying stocks. “You want to look for stability of income and growth,” the company's managing director and chief investment officer said at a meeting of local investors in Costa Mesa, Calif. last Thursday. “That probably doesn't mean bonds.” Mr. Gross said that he is personally buying stock in AT&T Inc. and Verizon Communications Inc., for example, both stable companies that pay a 6% dividend. “You can at least bank that dividend” if markets don't cooperate, he said during the meeting, which was sponsored by Women Investing in Security and Education, an investor group. Mr. Gross also suggested that attendees look at Pimco's closed-end-bond funds, with their 10% yields.

With credit spreads narrowing, he said, all types of bonds have become “Treasury-like.”

“The markets have been "de-risked,'” Mr. Gross added.

In addition, he said that he is unveiling a market commentary that will address California's economic problems. The piece will be titled “Do-Do Economics,” Mr. Gross said.

“It's the first time I've dared to venture into the potential negatives of my home state,” he said.

California's recent budget deal was “just a sham,” Mr. Gross said, because much of the savings come at the expense of local governments.

E-mail Dan Jamieson at


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