Investors looking for double-digit returns from their holdings are going to have to learn to live in a different world for the next several years, bond kingpin Bill Gross said.
Those types of gains, particularly in stocks and real estate, will not return on a broad basis until the recession ends and the government can reflate the economy, Gross, head of the Pimco bond fund, told CNBC.
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"To the extent that investors previously thought that double-digit returns were there for the taking, were there for the having, in the forms of stocks for the long run or housing prices going up at double-digit rates, those asset classes will not show that type of appreciation," he said. "So bonds at stable incomes of 4 to 6 percent are an attractive situation."
Gross touted municipal bounds as a way to "shake hands with the government," while he also advocated mortgage debt backed by government agencies such as Fannie Mae and Freddie Mac .
And he said Treasury Inflation-Protected Securities, or TIPS, are a good place to be for those looking for protection against rising cost of living.
He defended the rash of government spending in inflating the economy, saying it's necessary to get things back on solid footing.
"We need all of the programs that the government has basically put forward," Gross said. "We need trillions of dollars despite the fact that the budget deficits will be in the trillions. And we need them for at least several years in order to get that 4 to 5 percent growth rate that's required."