Is Ben Bernanke Lying? Another Reason To Think Outside Your Borders
by Dr. Steve Sjuggerud
March 21, 2006
Bill Gross is furious…
In last Wednesday’s DailyWealth, I wrote about Gross, his views on the housing market, and a great way to bet against the junk bond market. Today’s issue features Bill again... this time he’s talking about Ben Bernanke.
In his latest Investment Outlook, the billionaire bond manager absolutely blasted the latest Economic Report of the President. This report is sort of a “state of the union” in economic figures, and it’s from the desk of Ben Bernanke (Alan Greenspan’s replacement).
Gross said “It’s not so much that the report was a compilation of untruths or even half-truths. It’s just that it failed to tell the truth…”
Bill then told it to us straight: Based on the course we’re on, he says, we’re headed for a massive fall in the value of the dollar, and ever-increasing taxes.
“Investment markets in the United States will not ultimately prosper under such an increasingly odorous environment,” Gross says. “It is only sensible, therefore, to diversify globally.”
Bill Gross, if you don’t know, is the world’s biggest investor. He’s responsible for investing over a half-trillion dollars. He’s reached this position because he’s made investors lots of money – year in, year out – for decades. A billion-dollar purchase is nothing to him…
When Forbes asked him last month about his last significant purchase, he said it “...was about an hour ago, a McDonald’s cheeseburger. It was significant because I couldn’t think of anything else I wanted more in the world at that time than that cheeseburger.... Oh, and I bought a billion dollars of Treasury bonds… that I hope my clients will appreciate someday as much as I did that cheeseburger.”
Despite his seriously negative comments about the outlook for U.S. investments, Bill Gross is not a gloom-and-doom type of guy. His track record is proof… Who in America has gotten rich by being a pessimist over the last three decades? Bill’s gotten rich by always finding something to buy.
And probably 90% of the investments he’s made in his career have been in the Good Old U.S. of A. Today, thanks to his investing in the U.S., Bill Gross is a billionaire.
But now Bill is seriously worried. He’s worried about health care, as one example. Bill says, according to the latest Economic Report of the President, “health care will consume 23% of [the U.S. economy] in 20 years time versus 6% in 1965.”
Bill says we’ll end up paying the rising cost of health care expenses “via higher personal and corporate taxes,” and “currency devaluation.”
The picture Bill paints is very bleak. Investment markets in the U.S. will not prosper in that environment. As he says, “it’s only sensible” to diversify globally.
Good Investing,
Steve
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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