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.
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
