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Billionaire ‘Bond King’ Bill Gross Recommends 4 Defensive Investments for a Bull Market He Sees Losing Momentum

Bill Gross

Lucy Nicholson/Reuters

  • Billionaire investor Bill Gross says the stock market’s record run will slow.

  • He advises investors to reposition themselves towards defensive and high-yield stocks.

  • His favorite investments right now include MLP pipelines and municipal income funds.

Although this year’s record-breaking stock rally continues to impress Wall Street, billionaire investor Bill Gross isn’t so sure the bull market will keep up its hot streak for much longer.

According to the latest note from the so-called Bond King, investors should reposition themselves to defensive and higher-yielding stocks as momentum fades. He also recommended low exposure to fixed income, having previously criticized current Treasury conditions.

“No bear market, but not the same bull market anymore,” Gross said, adding that stocks are set for “low buy positive” returns going forward.

Gross also listed four of his current favorite investments:

The first is Come on, an electrical services company that has grown 5% year-to-date. It’s a 10% upside buy over the next 12 months, he said.

Gross also promoted several limited partnership pipelines, an investment he frequently points to as a fruitful alternative to bonds. He noted that MLPs offer 8% tax-deferred returns. In May, he said MLPs were “almost as good as AI.”

On the subject of the Treasury’s alternatives, Gross also cited Annaly Capital Managementa high yield mortgage REIT.

He also sees municipal income funds as a worthwhile investment, as many have offered tax-free returns of more than 7%. Gross named him DWS Municipal Revenue Trust as an example, but noted that there are 20 to 30 others to choose from.

“7% may not last forever, but for now these funds are trading at 6-8%,” he said.

Gross doesn’t go so far as to predict that the stock bull run is about to crash, just that a number of headwinds are around the corner. These range from broad assessments to a variety of macroeconomic and geopolitical headwinds.

Gross specifically mentioned higher corporate taxes under the Kamala Harris presidency, as well as slowing growth if military tensions continue to escalate globally. Rising deficits — a problem the investor has repeatedly warned about — will eventually slow spending.

Gross also referred to the cash record held by legendary investor Warren Buffett, which some see as a sign that the market could soon sell off. For Gross, at least it signals “a bumpy road ahead.”

His note also cited some positives to counter the listed headwinds, such as lower inflation and continued investment in artificial intelligence.

Read the original article on Business Insider

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