Where’s the smart money going these days?

For anyone paying attention to the financial markets of late, it should be clear that we’re heading into some troubled waters.  Stock market volatility has been unusually high with wild point swings to the upside and downside, commodity prices are collapsing across the board and savers are getting hammered by central bank policies that keep interest rates artificially low thereby punishing anyone trying to get a decent rate of return on their savings.

 

So, when a legendary investment advisor begins to question the health of the markets today, it’s probably a pretty good idea to pay attention to his observations.

 

Bill Gross is one of the most respected financial advisors in the world and was the founder of PIMCO, the world’s largest bond fund.  Now working at The Janus Capital Group, Mr. Gross recently penned one of his famous missives about the current state of the financial market.

 

Briefly, Mr. Gross believes, “that something may be amiss in the global economy itself” and that the misguided policies of the Federal Reserve and other central banks around the world have made the financial markets, “so out of whack that it is in need of a major readjustment.”  The result is that the relationship between saving and investment has been dislocated and the real economies of the world have suffered a decline in productivity.  What are the long term effects of these policies? Mr. Gross says, “equity market capital gains and future returns are likely to be limited if not downward sloping. High quality global bond markets offer little reward relative to durational risk. Private equity and hedge related returns cannot long prosper if global growth remains anemic.”

 

 In this dismal economic environment, what’s an informed investor to do? According to Mr. Gross, “Cash or better yet “near cash” …. are my best idea of appropriate risks/reward investments.”  So, one of the best known financial advisors in the world is telling his clients to stay out of the market, steer clear of long term bonds and keep their wealth stored in cash or short term cash equivalents.   To this I would add hard assets such as gold, silver and income producing real estate.  Mr. Gross sums up his current investment philosophy with a quip, “as Will Rogers once said during the Great Depression – “I’m not so much concerned about the return on my money as the return of my money.”

 

With cash flowing investment properties in mind, Inside Panama Real Estate has three very attractive rental properties in Boquete, Panama which can produce annual cash returns in the 6% range.  All of these properties are in highly prized master planned communities with established rental histories.

 

Like gold, silver and other precious metals, real estate may fluctuate in value over time but it will never be worth zero.