There must be some way out of here. Reading Andy Gluck's gloomy column this month on page 31 that surveys six of the smartest RIAs in the business, I found myself thinking of Bob Dylan's lyrics from All Along The Watchtower.
In his column, Andy went back and interviewed the same RIAs-Bill Bengen, Tom Connelly, Richie Lee, Jerry Gray, Bill Carter and Robert Levitt-who he had talked to in April 2008. Six months before Lehman Brothers' bankruptcy, none of them foresaw how deep the financial crisis would be. Yet all were alert that something wasn't right with the global financial system and most positioned client portfolios accordingly.
What's clear is that none of them believe the global financial system is out of the woods. While the degree of gloom varies from advisor to advisor, the optimists think the best scenario would be for the U.S. economy to stumble along for the next three years with modestly positive returns on equities.
Most are quite unhappy with the political leadership in Washington, but have few ideas of what would turn things around. The dynamics of deleveraging, they seem to reason, nearly ensures a weak recovery, if not a double-dip recession.
So when I walked through Penn Station and saw a copy of Bloomberg Markets with Pimco's Bill Gross on the cover saying the Bond King liked equities, the gloom prompted by Andy's column temporarily lifted. Bill Gross bullish! It had to be a joke.
I've interviewed Gross several times in my career. Together with Loomis Sayles' Dan Fuss, he was kind enough to give us an interview for the premier issue of Financial Advisor.
One of the smartest people ever to run a bond fund, Gross also is an outstanding writer. But he is not someone most of us would ever accuse of excessive optimism.
Ten years ago I asked him why his fund had performed so well from 1995 to 2000 when his outlook for the economy proved to be consistently more pessimistic than others about what turned out to be a halcyon era. Was it because he placed bets that worked out whether he was right or wrong? "That's the secret," he said.
In the recent article in Bloomberg Markets, Gross hardly comes across as a wild bull on equities. Instead, he's simply a whole lot more bearish on most fixed-income securities. "Bonds have seen their best days," he declares.
He'll get few arguments on that point. The article also notes that Pimco is making a major move into equity funds and comments that the giant firm's rivals frequently carp about Gross and others talking up their positions.