Pimco's One Big Idea - Bill Gross

[jtvalue]

 

http://www.pimco.com/EN/Insights/Pages/One-Big-Idea.aspx

[ni-co]

This reminds me of Isaiah Berlin's essay "The Hedgehog and the Fox" ("The fox knows many things, but the hedgehog knows one big thing.") – I've never understood hedgehogs – and they are dangerous, too.

[peter1234]

Big Idea Speed Read

 

1. The New Neutral is PIMCO’s one big idea currently.

 

2. If it is lower than the historical 2% real, and if it facilitates normal asset volatility, then stocks, bonds, and risk assets in general should appear less bubbly than some presume.

[Guest wellmont]

their big idea is things are going to be less volatile going forward. right after this idea came out things started to get more volatile.

[blainehodder]

"if the New Neutral real FF (federal funds) rate is 0% instead of the Fed’s currently presumed 1¾%, then not only bonds but all financial assets might logically be repriced relative to historical experience.  Even after accepting the historical validity and predictive capability of Robert Shiller’s CAPE (10-year cyclically adjusted P/E ratio), it may be necessary to make adjustments to it, if in fact real policy interest rates over the long term have settled into a lower New Neutral"

 

Profound... his "Big Idea" is basically what is taught in every intro to finance course for decades: Lower discount rates = higher valuations.

 

 

[james22]

"Events, dear boy, events."