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Bill Gross: The stock market is like 'an old-age retirement community'

  • The stock market's best days are likely behind it as central banks take away the high levels of stimulus they've provided, Janus Henderson's Bill Gross says.
  • Gross spoke as the bull market that began in March 2009 has hit a bit of a soft patch lately, with the Dow and S&P 500 both down slightly this month.
  • His Janus Henderson Global Unconstrained Bond fund has been a laggard this year, with a total return of 2.4 percent.

The stock market's best days are likely behind it as central banks around the world take away the high levels of stimulus they've provided over the past decade, Janus Henderson portfolio manager Bill Gross said Wednesday.

Though normally known for his bond expertise, Gross in recent days has been chiming in on the equity side, with a pessimistic view of the landscape.

"I'm not supporting a bear market, but sort of a market where you move into an old-age retirement community where the pace of activity and prices behave more maturely," he told CNBC's "Power Lunch" program. "So I think sort of the halcyon days are over."

Gross spoke as the bull market that began in March 2009 has hit a bit of a soft patch lately. The S&P 500 and Dow industrials are down narrowly in November after enjoying a powerful and almost uninterrupted run through most of 2017.

The culprit, he said, is the Fed and its global cohorts finally pulling back on stimulus after years of bargain-basement interest rates and trillions in money printing. With that support fading, investors are going to have to get used to lower returns, he said.

"I think double-digit increases are over, simply because the credit cycle itself is pulling back," Gross said. "The Fed is raising interest rates, the Fed is reducing its balance sheet, the ECB is reducing its balance sheet by half and ultimately raising interest rates. These are slight negatives that argue against a continuing bull market."

Such warnings, though, aren't terribly new for Gross, particularly since he left Pimco, the bond giant he co-founded, and began running the Janus Henderson Global Unconstrained Bond fund, which now has $2.2 billion in assets. The three-star fund has been a laggard this year, with a total return of 2.4 percent that places it in the bottom-third of similar funds, according to Morningstar rankings.

Nevertheless, he has been consistent in his warnings that stocks and bonds are in for lower returns.

He also is taking a dim view of the current tax plans in Washington, saying they are too focused on giving companies a break.

"Consumers haven't been getting a fair break," he said. "Without consumers, without tax breaks going to people as opposed to corporations, ultimately capitalism fails."