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Stocks have gone too far too fast and are due for a retreat in an economy that will grow slowly, Pimco's Bill Gross said on CNBC.
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Comparing the growth scenarios to a choice between humorist Will Rogers and Barney Fife—the loveable but hapless deputy on the 1960s comedy "The Andy Griffith Show"—Gross said the current market falls into the latter category.
"We've got a Barney Fife market. Not sure what Barney would say about the market—you could imagine some sort of goofy, speculative market running far too high," Gross said in a live interview. "We think the market...is due for a pullback or setback only because it's gone so far and economic growth cannot go so far."
With nearly $1 trillion assets under management, Gross runs the largest bond fund in the world at Pimco.
For investors, he said the best bets going forward will be corporate and municipal bonds that are still paying strong yields, though Treasurys may not be the way to go as the Federal Reserve begins stepping away from its aggressive buying of government debt.
He said investors should back "out of risk assets back into relatively risk-free assets. That doesn't necessarily mean Treasurys, but other high-quality type triple-A and double-A securities."
Gross' assessment was not universally shared.
Bob Doll, vice chairman and global CIO for BlackRock, agreed that a pullback is likely but said equities are still the best place to be, especially compared to the anemic yields of many fixed-income alternatives such as money markets.
A retracement to 950 on the Standard & Poor's 500 is possible, Doll said, but that will still leave the market in good shape compared to the doomsday scenarios that prevailed not so long ago.
"Comparing where we are only to the March lows, important as that is, is missing the point. Why don't we compare where we were after the Lehman crisis a year ago?" he said. "We have long-term problems no doubt about it. I would still posit that we are at the sweet spot of this economic recovery."
But Doll said growth won't happen easily, and investors will have to be patient.
"There will be lots of fits and starts," he said. "That's what the market has to contend with."
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