Bond guru Bill Gross: If you want to save your financial butt, put your money in Canada or Australia

by editor on May 6, 2011

The Editor and the Administrator have an on-going debate about the best way to survive the looming financial Armageddon. The Administrator opts for gold while the Editor opts for Aussie dollars.

Looks like Bill Gross, the Warren Buffet of bonds, sides with the Editor on this one.

bill-gross

Bond guru Bill Gross tells you how to avoid financial Armagedon

NOTE: The Editor is a well-known financial moron and this may well be a case of a blind pig finding an acorn.

The Wall Street Journal has the details:

Famed bond-fund manager Bill Gross argued in favor of non-dollar-denominated emerging-market debt, saying low interest rates such as those in the U.S. coupled with inflation represent “an immediate threat” to investment portfolios.

Gross, in his monthly missive on Pacific Investment Management Co.’s website, continued his argument against a policy of keeping interest rates low, which he has said would end up losing money for investors. Tuesday, he warned developed economies are in a position to use so-called financial repression to reduce debt-to-GDP ratios at the expense of bond investors.

Investors could see increasing negative real yields due to accelerating inflation, he said.

Gross said Pimco advocates alternatives such as developing-market debt at higher yields denominated in non-dollar currencies. He noted that many such issuers offer “pristine” balance sheets and attractive real interest rates.

“If AAA quality is your requirement, then Canadian or Australian bonds may also fit your horizon,” he added.

Pimco has dumped all U.S. government-related holdings from the Total Return Fund, the world’s biggest bond fund.

In interest of full disclosure, it should also be noted that Mrs. Editor once worked at Pimco and had a very close relationship with Gross, as told in the comments of this earlier article.

H/T: Wall Street Journal

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9 Comments on "Bond guru Bill Gross: If you want to save your financial butt, put your money in Canada or Australia"

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andycanuck
Member

As I am now the Canadian Minister of Finance after the recent majority government election win for the Conservative Party of Canada, if you will send me your online account information and credit card numbers, I will see to it that your money survives two more years of Obama. (Let alone a further four after that!)

Thank you; come again.

Babydoll102187
Member

This is so bizarre, i was just talking to my husband about this the other day. We are thinking the economic down fall is going to happen alot sooner, but we are newbies to investing. If hypothetically we moved our dollars, does any one have any advise on what to move them into and how to do it legally? without outrageous taxes?

perlcat
Member

Number one rule. Don’t invest because you’re scared. There’s money to be made selling investments to scared people.

I buy silver instead of gold because if there’s a collapse, I want to buy bread as opposed to a house. That’s just me. Don’t put all your eggs in one basket.

Babydoll102187
Member

Thank you Perlcat, i was thinking silver myself. Maybe a little gold:)

Robert
Guest

Please do not simply buy two metals and think that means you spread your risks! Other good things to look into would definetely be food such as wheat, corn and rice. The three biggest food items outs there. There will be a need for those regardless of an economic collapse. Even if people are poor they still need to eat.

Now, I’m not talking about actually buying bags of corn, instead invest in companies producing these goods. And ofcourse get some silver as well.

Also, when investing – especially if your new to it. Stick to things that you know. Let’s say for example that you really like guns and know alot about them. Then look for weapon companies that sell something you think could really succeed. Don’t go buy shares in some energy company that “everyone” says are going to be great if you don’t know squat about their workings.

There are much more to be said, this is my line of work so please feel free to ask away. Also the read stuff like the economist etc. Don’t rely entirely on sites like Randome-11 posted… but don’t completey dismiss them either.

Randome-11
Guest
jukin
Guest

Just think what it would be like if Tim “Turbo Tax” Geitner DID NOT have a strong dollar policy.

And of course, the obligatory…..

SMART Power!!!!111!!!!eleventy

Robert
Guest

Agreed, in my personal investment portfolio I have a single fund related to the US. And it’s hedged against a bunch of european currencies so that it wont get hit to hard by the dollars decline. The rest i put in Eastern europe, Canada and australia.

Companies that extract oil out of the canadian tar sands have been a real winner, and so will the Australian mining companies be as China continues to shop for raw materials. Not to mention Japan that will do the same as they rebuild from the Earthquake and tsunami.

Mr Admin might definetely be a winner in the long run as a lot of guys in my line of work (me included) thinks that the dollar will probably fall relative to gold with another 20% the coming years.

perlcat
Member

My problem with investing in currencies is that so many of them are tied to ours — the Chinese, for example, stand to lose big if we devalue our currency, thanks to their holding our paper. (Not that I’m all that sympathetic.)

I suppose the “if one of us goes to hell quickly, we should take steps to go to hell slower” plan is better than blindly riding this elevator top speed to the bottom, but I question the need to go to hell in the first place. I don’t even trust ETF’s for this one — too easy for the same ounce of gold to be sold many times, for example, as is currently being done with silver — I think that some banks were at 100:1 ratio, and charging every customer for storage fees to the same one ounce of silver.

I’ll stick with metals in spendable amounts, and with a plan to buy a fixed amount of the actual item every month. That, and maximize my leverage at the lowest fixed rate of interest possible. The lenders not on the take are the ones that are going to be holding the bag here, even after the devaluation of the currency and the subsequent bailout.

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