Pimco's Bill Gross: The 'new normal' may be to avoid most bonds

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. "That probably doesn't mean bonds." He said he was 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 Irvine, Calif.-based investor group. Mr. Gross also suggested that attendees look at Pimco's closed-end-bond funds, with their 10% yields. With credit spreads narrowing, Mr. Gross said, all types of bonds have become "Treasury-like.” “The markets have been ‘derisked,'" he added. Mr. Gross also revealed that he's unveiling a market commentary that will address California's economic problems. The piece will be entitled "Do-Do Economics," he said. "It's the first time I've dared to venture into the potential negatives of my home state," he said. The state's recent budget deal was "just a sham," he said, because much of the savings come at the expense of local governments.