I have said it before do not be moved by current price swings, stay the course and hold your positions in anything tangible.
U.S. inflation understated, Pimco’s Gross says
By Rex Nutting, MarketWatch
Last update: 3:29 p.m. EDT May 22, 2008
WASHINGTON (MarketWatch) — The U.S. government has been understating inflation, which has led investors to misprice stocks, bonds and real estate, noted bond-fund manager Bill Gross said Thursday.
The real problem is not that the government publishes dubious numbers but that investors believe them and make decisions based upon them, he said.
“A readjustment of investor mentality in the valuation of all three of these investment categories — bonds, stocks, and real estate — would mean a downward adjustment of price of maybe 5% in bonds and perhaps 10% or more in U.S. stocks and commercial real estate,” Gross wrote in his monthly letter to clients of Pacific Investment Management Co., the largest fixed-income money managers in the world.
Gross, the managing director of Pimco, said investors should shun Treasurys, including inflation-protected Treasurys, and put their money into commodity-backed assets, including foreign equities.