I attach charts on S&P500 and Corporate Bond Total Return indexes showing very strong performance since the 1980s.
Bonds jumped from below 400 to nearly 3200 since 1987 an eight-fold increase for a per annum return of 8% ln(8)/(2013-1987)
S&P500 jumped from 200 to 1600 over the same time period also an eight-fold increase. (Not including dividends that would push stock returns higher than bonds)
Interest rates are stuck at historically low rates near zero, probably due to QE stimulus measures of the Federal Reserve board. If interest rates go higher then that should clobber Stocks and Bonds via the discounted present value formula. QE was recently reduced, so maybe that is why Stocks and Bonds prices are falling back somewhat? Maybe more declines to come? Is that why El-Erian left Pimco? He sees problems ahead so wanted to get out before the crash so his reputation will not be damaged? Will he be the first Egyptian California Governor?
Seems that the Bernanke QE stimulus boosted rich people’s stock and bond portfolio but did little for poor and middle class people’s pocket books so they could not spend much money on products so inflation rates were held low, as shown by the CPI chart attached. CPI inflation remains very low by historical standards, like interest rates. How can the Bernanke policy be called stimulative with such low CPI inflation rate?
Could Bernanke have come up with a better stimulus policy that benefited poor and middle class people so they could afford to buy more and push up the inflation rate? Do you think Yellen will be more capable of causing inflation? Obama is complaining about increasing inequality but hasn’t he been in charge since 2008 when much of these deflationary policies have been going on? Aren’t Obama and Bernanke part of the problem, not the solution? That is inflating rich people’s portfolios while deflating people so CPI gets deflated.
Mr. El-Erian, 55 years old, will leave in mid-March after seven years at the helm of the Newport Beach, Calif., firm, which manages $2 trillion as a largely autonomous unit of German insurer Allianz
Pimco’s effort to build a stock-fund business, launched under Mr. El-Erian, has faltered
Pimco Total Return Fund suffered industry-record outflows in 2013, when stocks posted their biggest gains in over a decade.
Investors yanked a net $41.1 billion from the Total Return fund in 2013, and
Pimco’s U.S.-listed mutual funds suffered $30.4 billion in withdrawals, their first since at least 1993.
“Equities seems to have been the area where [Pimco] has been behind competitors,”
El-Erian unexpectedly announced his resignation as CEO.
Pimco offered no explanation for the departure, sparking conjecture on Wall Street about whether the current challenges at the investment giant played a role.
“He was doing CNBC and Bloomberg and all the editorials to make him so prominent — and then, poof,” “To see him leave is so shocking. There was no prelude to this.”
Pacific Investment Management Co. rode the decades-long surge in bonds to become a Wall Street colossus. The company manages $2 trillion in assets, including the savings of millions of individual investors in 401(k) retirement plans