Pimco bond maven Bill Gross tempered his dour outlook for stocks, telling CNBC on Wednesday that equity bulls “should expect less” from a market bound to be undermined by slowing global growth that will lower returns.
Gross also qualified some of the criticism that drew a strong defense of stock market returns from finance professor Jeremy Siegel. Earlier this week, the fund manager caused a stir with his monthly outlook when he said stock market returns were all but built on a Ponzi scheme.
“I’m not dissing stocks, I’m simply suggesting that the double-digit returns investors grew used to over the past 20 or 30 years basically are a thing of the past,” Gross said. Still, “stocks will do better than bonds in the long, long-term,” he added.
Paraphrasing an old hit song by disco queen Donna Summer, Gross joked that retiring baby boomer investors were going to have to “work hard for the money” instead of expecting the money to work hard for them.
With Europe’s debt crisis battering markets and fears growing about the health of the U.S. economy, Gross stated that equities have a higher risk premium built into their prices.
Gross spoke after the Federal Reserve left its