Gross's New Normal Prediction Fails to Materialize as Equities Outpace Bonds

Bill Gross predicted in 2009 that the "New Normal" economy would bring low growth, lower corporate profits, and weak stock market returns. He advocated for "stable and secure income" from bonds instead.

Investors listened and redeemed equity funds in favor of Gross's Pimco Total Return bond fund. Over $100 billion went the "wrong way."

Equities greatly outperformed bonds over the next few years, contrary to Gross's prediction. His belief in a "New Normal" was deeply self-serving.

People see what they wish to see. Gross likely believed his own prediction, but underestimated the power of precedent and overestimated how different things would be.

Those who altered their investments because they expected this time to be different were proved wrong. The latest proclaimed New Normal was not much different after all.